Optimal pricing and green decisions in a dual-channel supply chain with cap-and-trade regulation

The issue of low carbon emission reduction is getting more and more attention. This paper focuses on analyzing the equilibriums and digging deep into the impacts of cap-and-trade regulation, joint emission abatement scheme, and online direct channel on the performances of supply chain. By constructing two decentralized models in the single/joint emission abatement schemes under cap-and-trade regulation in a dual-channel supply chain, we find that consumer’s environmental preference effectually motivates both the manufacturer and retailer to reduce emissions with joint emission abatement scheme. The analysis results show that introducing an online channel is always good for improving enterprises’ profits, as well as protecting the environment in the joint emission abatement. Besides, the retailer should provide consumers with better service in the retail channel, which can further promote purchase power and drive the sustainable development of the supply chain. The manufacturer, when consumers have strong environmental preferences, should actively participate in cap-and-trade mechanism no matter single or joint emission abatement scheme is enforced.