Accelerate or hinder it? Manufacturer transformation under competition and carbon emission trading
研究碳排放交易政策下，两个效率不同的制造商如何通过产量、减排和配额交易决策相互影响，发现低成本制造商可能因出售配额反而增强对手竞争力，且政策可能引发行业合谋，对高低成本制造商的转型影响不同。
Strengthening carbon regulations and competitive pressures are forcing supply chains to provide environmental (e-) products to replace traditional (t-) products. However, cap-and-trade policy allows manufacturers, the main carbon emission emitters, to trade their emission permits freely. Considering manufacturers' power and key role in producing and carbon trading, we develop a duopoly model consisting of two competing manufacturers. Despite asymmetrical carbon emission reduction efficiencies, the two manufacturers can independently and simultaneously decide their respective t-/e-products outputs, emission reduction levels, and permits trade quotas. The unique Nash equilibrium is derived with the overall cap. We find that the low-cost manufacturer uses its cost advantage to invest more in emission reduction, then sells the excess emission permits to its rival, but makes its rival more competitive in product market. Interestingly, our results show that cap-and-trade policy triggers an industry collusion in which manufacturers reduce competition and improve the power and profits by reducing overall output and adopting differentiated product strategy. Furthermore, the cost advantage and high product substitution can accelerate low-cost manufacturer's transformation but hinder high-cost manufacturers. The impacts of cap-and-trade policy on consumer surplus and social welfare are also discussed to provide guidance for policy makers.