Coordination Analysis Of The Emission-Dependent Supply Chain Under Asymmetric Information

Human survival is facing the challenge of environmental degradation, the most significant one of which is global warming. So all countries fully cooperate to reduce emission, and explore the method of emission management. So far, Cap-and-trade system constituted by European Union is of the most maturity. As an important economy unit, emission-dependent supply chain plays a decisive role in emission reduction. Under the system of “cap-and-trade” emission-dependent manufacturers acquire the emission quotas from the government and when the quotas can 't meet the need of production they can buy emission permits from perm its suppliers. As a result, the cap makes an impact on the decision-making of both emission-dependent manufacturers and permit suppliers. Based on the principal-agent theory of information economics and consumer behavior of behavioral economics, the paper researches the best decision-making of emission-dependent supply chain under asymmetric cap i nformation, to further the studies of emission-dependent supply chain and provide some reference for supply chain operation and contract design.This article firstly considers the best decision-making of emission-dependent supply chain under asymmetric information based on principal-agent theory and proposes a permits trading contract to impel the emission-dependent manufacturers to report real type and realize coordination of supply chain. The value of cap information has been analyzed either. It suggests that, permit suppliers suffer a loss with asymmetric information but emission-dependent manufacturers of high cap benefit from that. The value of cap information is related to the probabilities of cap types and it increases as the probability of low type rises. Secondly, it considers the decision-making of emission-dependent supply chain when manufacturers implement emission reduction. The demand function is built based on consumers' low-carbon emission preference, and Stankelberg model is used to study the coordination of the supply chain under asymmetric information. It suggests that, consumers' preference for emission reduction boosts the profits of supply chain members, whereas asymmetric information weakens the positive impact.In a word, this paper constitutes two game model of emission-dependent supply chain with asymmetric cap information u nder the “cap-and-trade” system, based on game theory and consumer behavior. The impact of cap information on the supply chain operation and contract design has been discussed, which makes some signifi-cance for the implementation of emission reduction.