Supply Chain Design and Carbon Penalty: Monopoly vs. Monopolistic Competition

Supply Chain Design and Carbon Penalty: Monopoly vs. Monopolistic Competition

0.00 Avg rating0 Votes
Article ID: iaor201529051
Volume: 24
Issue: 9
Start Page Number: 1494
End Page Number: 1508
Publication Date: Sep 2015
Journal: Production and Operations Management
Authors: , , ,
Keywords: geography & environment, decision, retailing, economics
Abstract:

This paper studies whether imposing carbon costs changes the supply chain structure and social welfare. We explore the problem from a central policymaker's perspective who wants to maximize social welfare. We consider two stakeholders, retailers, and consumers, who optimize their own objectives (i.e., profits and net utility) and three competitive settings (i.e., monopoly, monopolistic competition with symmetric market share, and monopolistic competition with asymmetric market share). For the monopoly case, we find that when the retailer's profit is high, imposing some carbon emission charges on the retailer and the consumers does not substantially change the supply chain structure or the social welfare. However, when the retailer's profit is low, imposing carbon costs optimally can lead to a significant increase in social welfare. Moreover, the impact of imposing carbon emission charges becomes more significant when the degree of competition increases. Additionally, the quantum of benefit may depend only on factors common across industries, such as fuel and carbon costs.

Reviews

Required fields are marked *. Your email address will not be published.