IJERPH, Vol. 15, Pages 367: Managing Risk Aversion for Low-Carbon Supply Chains with Emission Abatement Outsourcing

IJERPH, Vol. 15, Pages 367: Managing Risk Aversion for Low-Carbon Supply Chains with Emission Abatement Outsourcing International Journal of Environmental Research and Public Health doi: 10.3390/ijerph15020367 Authors: Qinpeng Wang Longfei He Reducing carbon emissions, including emission abatement outsourcing at the supply-chain level, is becoming a significant but challenging problem in practice. Confronting this challenge, we therefore break down the practice to focus on a low-carbon supply chain consisting of one supplier, one manufacturer and one third-party emission-reducing contractor. The contractor offers a carbon reduction service to the manufacturer. In view of the increasing proportion of Greenhouse Gases (GHG) emissions and absence of carbon reduction policies in developing countries, we adopt the prospect of consumers’ low-carbon preferences to capture the demand sensitivity on carbon emission. By exploiting the Mean-Variance (MV) model, we develop a supply chain game model considering risk aversion. Comparing the supply chain performances of the cases under risk neutrality and risk aversion, we investigate the impact of the risk aversion of the supplier and the manufacturer on the low-carbon supply chain performances, respectively. We show that the risk aversion of chain members will not influence the relationship underlain by the profit-sharing contract between the manufacturer and contractor, whereas they may extend the supplier’s concerning rang...
Source: International Journal of Environmental Research and Public Health - Category: Environmental Health Authors: Tags: Article Source Type: research