<p>With accelerating climate change and growing consumer environmental awareness, governments are imposing stricter regulations—such as carbon tax policies—to curb industrial emissions. These policies significantly influence supply chain dynamics, particularly in pricing and sustainability decisions. This paper examines the interaction between pricing and carbon reduction strategies for two complementary products under a government-enforced carbon tax policy. The supply chain comprises two manufacturers producing complementary goods and a retailer distributing them to end consumers. Using a Stackelberg game framework, we model manufacturers as leaders and the retailer as the follower of the game. A numerical study demonstrates optimal pricing and carbon-emission-reduction strategies for all supply chain members. Our findings reveal that the carbon tax policy effectively reduces emissions but creates profit trade-offs: while manufacturers absorb higher costs, they can partially offset these through strategic pricing adjustments. Consumer environmental awareness (CEA) amplifies the policy’s positive impact, enabling firms to leverage sustainability efforts for higher margins. However, strong product complementarity constrains pricing flexibility, reducing profits and the incentives to reduce emissions.&#xa0;Finally, the study concludes that manufacturers must adopt a dual strategy: leveraging consumer environmental awareness to transform carbon taxes from a cost into a competitive advantage, while carefully calibrating their emission reduction investments to the degree of product complementarity.</p>

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Pricing and carbon reduction policies for two complementary products by considering carbon tax policy

  • Fariba Soleimani,
  • Alireza Arshadi Khamseh

摘要

With accelerating climate change and growing consumer environmental awareness, governments are imposing stricter regulations—such as carbon tax policies—to curb industrial emissions. These policies significantly influence supply chain dynamics, particularly in pricing and sustainability decisions. This paper examines the interaction between pricing and carbon reduction strategies for two complementary products under a government-enforced carbon tax policy. The supply chain comprises two manufacturers producing complementary goods and a retailer distributing them to end consumers. Using a Stackelberg game framework, we model manufacturers as leaders and the retailer as the follower of the game. A numerical study demonstrates optimal pricing and carbon-emission-reduction strategies for all supply chain members. Our findings reveal that the carbon tax policy effectively reduces emissions but creates profit trade-offs: while manufacturers absorb higher costs, they can partially offset these through strategic pricing adjustments. Consumer environmental awareness (CEA) amplifies the policy’s positive impact, enabling firms to leverage sustainability efforts for higher margins. However, strong product complementarity constrains pricing flexibility, reducing profits and the incentives to reduce emissions. Finally, the study concludes that manufacturers must adopt a dual strategy: leveraging consumer environmental awareness to transform carbon taxes from a cost into a competitive advantage, while carefully calibrating their emission reduction investments to the degree of product complementarity.