Modeling and Optimization of Supply Chains Considering Emission Reduction Efficiency Improvement Equity Investments between Vertically Related Firms

This paper investigates a dyadic supply chain consisting of one downstream enterprise with mature emission reduction technology and one upstream enterprise with immature emission reduction technology, in which the downstream enterprise makes emission reduction efficiency improvement equity investments in the upstream enterprise through technology, human resources, and equipment. We consider the impact of emission reduction efficiency improvement equity investments (EREIEIs) on the equilibrium decisions and profits of supply chain members under three power structures and explore changes in the environmental benefits of such investments. We find that EREIEIs improve the low carbon degree and wholesale price of the product and expands the end-market demand. Second, only enterprises with dominant power in the EREIEI process can consistently benefit. When the emission reduction efficiency is low, the enterprise with the dominant position in the supply chain has the first-mover advantage, but the overall profit of the supply chain can only be optimal when the supply chain enterprises make decisions at the same time. When the emission reduction efficiency is high, the supply chain structure dominated by the downstream enterprise not only benefits each supply chain enterprise but also greatly increases the environmental benefit