Pricing And Green Innovation Strategies For Firms Under Environmental Policies

To comply with political requirements of sustainable development and ever-increasing green demand in the market,an increasing number of entrepreneurs carry out green innovation,operating green production and selling green products to gain market competitiveness.Besides,firms seek cooperations with their upstream and downstream partners in the green supply chain,aiming to reduce cost,enhance technology and achieve mutual benefits.Applying optimal control theory and game theory,this thesis considers the environmental policies of minimum energy efficiency standard,emission cap,carbon tariff and government subsidy to investigate the green innovation and pricing strategies of firms under various policies and market environments as well as the collaboration mode preferences of green supply chain members.Main contents of this thesis are summarized as follows:First,this thesis investigates the dynamic pricing and energy efficiency innovation of a firm under minimum energy efficiency standard.The firm locates and sells products in a traditional market,but is able to open a green market if the product meets a minimum energy efficiency standard.Considering evolution of the product’s energy efficiency level,the non-continuous demand function leads to a non-smooth optimal control problem for the firm.Based on Bellman principal,the original non-smooth optimization problem is divided into two sub-problems by the standard-meeting time.Optimal solutions of each sub-problem are derived by applying Pontryagin’s maximal principal,after which an algorithm is proposed to search for the optimal standard-meeting time.Therefore,the firm’s optimal strategies can be generated.Several numerical examples are given to study the impacts of minimum energy efficiency standard on the optimal strategies for the firm.Results indicate that a stringent standard prevents the firm from exploring the green market,so that the firm produces low-efficiency products and sells merely in the traditional market.Appropriate and loose standards encourage the firm to strengthen innovation and enhance product efficiency so as to enter the green market and profit.Next,this thesis investigates the differentiated pricing and green process innovation strategies for a firm under policies of emission cap and carbon tariff.Suppose that the firm locates in a South country but sells products in the South and to a North country.The Southern government imposes an emission cap to restrict the firm’s total emission during manufacturing,while the Northern government enforces a carbon tariff on the firm’s exported products by embedded emission.The firm optimizes its profit by the pricing and green process innovation strategies.Considering the evolution of the product’s green process performance,the firm’s decision-making problem is an optimal control problem with an integral emission constraint of the state variable.The optimal strategies for the firm are derived by the Pontryagin’s maximum principal.Impacts of emission cap and carbon tariff on the firm and social welfare are studied.Results show that strict emission cap or tariff rate hinders the firm’s green process innovation.Besides,the size relationship between the local price and foreign price mainly depends on the Northern market environment.Finally,under government subsidy,this thesis investigates the pricing and product green innovation strategies of upstream and downstream firms in a green supply chain,and studies each member’s cooperation mode preferences.Consider that the firms have technology asymmetry,the market demand is positively impacted by the green performance of the final product,and the downstream firm receives a government subsidy.The collaboration examples of research and development(R&D)Cartel and Cost-sharing contract as well as a non-cooperative case are taken,and the corresponding Stackelberg games between upstream and downstream firms are established.Equilibrium strategies and corresponding profits for the firms under each example are derived by applying backward induction.Results show that the collaboration mode preferences of the two firms are generally different,however,R&D Cartel can be Pareto-improving under certain conditions.Besides,an empirical example is provided to verify the theoretical results,thus is able to support the scientific soundness and applicability of the modelling conclusions.