Journal of Korean Institute of Industrial Engineers (대한산업공학회지)

Korean Institute of Industrial Engineers (대한산업공학회)
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Supply Chain Coordination Under the Cap-and-trade Emissions Regulation

탄소배출권거래제도에서의 공급망 조정 모형

  • Min, Daiki (School of Business Ewha Womans University)
  • Received : 2015.02.09
  • Accepted : 2015.05.10
  • Published : 2015.06.15
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Abstract

This paper considers a supply chain consisting of a manufacturer under the cap-and-trade emissions regulation and a permit supplier. We study joint production quantity and investment in reducing permit production cost decisions for centralized and decentralized supply chains. We formulate two supply chain contracts with aims to coordinate the decentralized supply chain; wholesale price contract and cost-sharing contract. Under the cost-sharing contract, the manufacturer shares a part of the investment in reducing permit production cost and then is allowed to purchase emission permit at a lower price. We analytically find that the proposed cost-sharing contract with reasonable parameters can coordinate the supply chain whereas the wholesale price contract is not desirable to achieve the system-wide profit. Numerical example is followed to support the analysis.

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