Pricing Decision of Dual-Channel Supply Chain Based on Carbon
Emission Reduction Input Under Carbon Tax Policy
Hong Huo, Dan Luo
*a
and Zhanghua Yan
School of Management, Harbin University of Commerce, Harbin, China
Keywords: Tax Policy, Dual-Channel Supply Chain, Carbon Emission Reduction Input, Pricing Decision.
Abstract: This paper constructs the consumer demand function based on the low carbon preference of consumers.
Considering the manufacturer's carbon emission reduction investment, the pricing models of decentralized
supply chain and centralized supply chain based on consumer preference are constructed. This paper also
explores the effect of consumer low carbon sensitivity coefficient on wholesale prices, retail prices, demand
and profits of members. The results show that the profits and carbon emission reduction level of supply
chain members under centralized decision-making are greater than those of decentralized decision-making;
supply chain members' profits are positively correlated with consumer carbon emission reduction sensitivity
coefficient.
a
https://orcid.org/0000-0002-0466-8257
1 INTRODUCTION
The international community and governments pay
more attention to carbon emissions, put forward the
carbon tax policy, and achieved good environmental
benefits. The EU aims to reduce carbon emissions
by 40 percent from 1990 levels by 2030 (Liu, 2021).
On April 1, 2019, Canada introduced a nationwide
carbon tax pricing, imposing a carbon tax on units
(China Petrochemical News, 2019).
The formation of low carbon consumption
consciousness is transformed from the concept of
sustainable development in the era of low carbon
economy. Consumers usually consider the price of
products and services and low carbon factors when
making purchase behavior. It will also become an
important part of enterprises to judge customer
needs. Therefore, it can effectively promote the low
carbon process of supply chain incorporating
consumers' preferences into product decision and
network optimization of supply chain.
Companies in various fields such as IBM and
Apple have begun to use third-party platform
network sales channels. As a new marketing
channel, online sales channel is a kind of
competition or even suppression for the traditional
retail channel, and the living space of offline market
is getting smaller and smaller. Therefore, it is
particularly important for the retail industry what
joint online and offline sales channels.
In summary, this paper explores the decision-
making of an online direct Dual-channel supply
chain which is composed of a manufacturer and an
offline retailer considering the impact of low carbon
preference on channel sales prices. This paper
assumes that the manufacturer invests in carbon
emission reduction costs, and constructs two supply
chain pricing models based on consumer preferences
and carbon emission reduction investment under the
carbon tax policy.
2 LITERATURE REVIEW
This article is mainly related to the following four
aspects of literature: (1) Carbon tax policy, (2)
Consumer preference, (3) Carbon emission
reduction investment and (4) Dual-channel supply
chain pricing decision.
2.1 Carbon Tax Policy
Liu et al. (2022) discuss the impact of rising energy
prices caused by carbon tax policies on the welfare
of Chinese residents. Xu et al. (2022) take the green
marketing cost coefficient as the private information
Huo, H., Luo, D. and Yan, Z.
Pricing Decision of Dual-Channel Supply Chain Based on Carbon Emission Reduction Input Under Carbon Tax Policy.
DOI: 10.5220/0012026800003620
In Proceedings of the 4th International Conference on Economic Management and Model Engineering (ICEMME 2022), pages 127-133
ISBN: 978-989-758-636-1
Copyright
c
2023 by SCITEPRESS – Science and Technology Publications, Lda. Under CC license (CC BY-NC-ND 4.0)
127
of retailers, and discuss the impact of information
asymmetry on the optimal decision-making. Most of
the current research focuses on the impact of carbon
tax policy on supply chain pricing decisions.
2.2 Consumer Preference
Yalabik (2011) finds that consumers' green
consumption behaviors will directly determine
enterprises' willingness to produce green products
and increase low carbon technology R&D.
Yenipazarli et al. (2015) consider how consumers'
willingness to pay affects enterprises' choice of
product greenness. Hu et al. (2021) show that
consumers' low carbon preferences have a
significant impact on manufacturers' decisions.
Some scholars explore the impact of consumer
preferences on pricing decisions of products.
2.3 Carbon Emission Reduction
Investment
Chen et al.(2022) build a duopoly model that
considers technology R&D and technology sharing
in carbon emission reduction. Liu et al.(2022) show
that the R&D investment in precooling technology
and carbon emission reduction reach the highest
level in the centralized supply chain model. Few
scholars explore the pricing decisions
comprehensively considering the manufacturers'
carbon emission reduction input and consumers'
preferences.
2.4 Dual-Channel Supply Chain
Pricing Decision
Some scholars also introduced manufacturers'
carbon emission reduction input into the pricing
decision of Dual-channel supply chain. Zhang et al.
(2021) explore the impact of introducing online
channels on supply chain network equilibrium
decision-making, carbon emissions and profits. Che
et al. (2021) consider the impact of manufacturers'
participation in carbon trading and green financial
loans on participants' profits and emission reduction
decisions. Some scholars also explore the pricing
decision of Dual-channel supply chain considering
consumers' low carbon preferences. Xie et al. (2021)
show that the profits of producer, retailer and supply
chain have the same changes at different levels of
consumers' low carbon preference coefficient. This
paper comprehensively considers manufacturers'
carbon emission reduction input and consumers'
preferences under the carbon tax policy.
3 DUAL-CHANNEL SUPPLY
CHAIN PRICING MODEL
3.1 Problem Description and
Parameter Assumption
Under the background of carbon tax policy,
considering consumers' channel preference and low
carbon preference, the research objects of this paper
are a manufacturer and an offline retailer considering
the manufacturer's carbon emission reduction input.
Assume that the manufacturer establish an online
direct sale channel and an offline retail channel.
This paper assumes the supply and demand
balance in the supply chain market. Assume that the
manufacturer's carbon emission reduction input is
2
1
2
kg
. Assume that
represents the value of the
product purchased by consumers;
represents
consumer preference coefficient for online channels;
f
represents the cross price elasticity coefficient;
c
represents production cost;
1
w
represents wholesale
price;
i
P
represents retail prices of online direct sales
channels and offline retailers;
i
D
represents sales
volumes of online direct marketing channels and
offline retailers;
k
represents the carbon emission
reduction level coefficient of the manufacturer;
g
represents the carbon emission reduction level of the
manufacturer;
represents consumer carbon
emission reduction sensitivity coefficient;
e
represents the unit carbon emission of the product;
y
represents the tax price of unit carbon emissions;
E
represents carbon emission difference;
j
M
,
j
R
and
j
represent profits of manufacturers, retailers and
the whole supply chain respectively;
1, 2i
represent
online direct sales channels and offline retailers
respectively;
,
j
DC
represent decentralized supply
chain pricing models and centralized supply chain
pricing models respectively.
3.2 Pricing Model of Decentralized
Supply Chain
This section explores the pricing decision of online
direct sales Dual-channel supply chain under the
carbon tax policy considering the carbon emission
reduction investment which is to improve the carbon
emission reduction level of products through
technical means. At this time, the demand functions
of online direct sales channels and offline retailers
are as follows:
112
=
D
P
fP gD


(1)
ICEMME 2022 - The International Conference on Economic Management and Model Engineering
128

221
=1
D
P
fP gD


(2)
The profit functions are as follows:
 
2
111 2
1
2
DD DD DD D
M
pcD wcD kyE g
(3)

212
D
DDD
R
wDP
(4)
 
2
111 2
1
2
DD DD DD D
pcD p D kgcyE
(5)
Where
12
D
DD
egD DE 
.
Proposition 3.1 There are optimal wholesale
price, retail prices, sales volumes and profits for the
manufacturer and offline retailer:


























22
*
1
2
22
*
1
2
*22 2
2
2
22
11 1 11
21
1111
21
1
32311
41
23 1 1
D
D
D
w
p
p
ffyfgfcye
f
ff f yfgfcye
f
f
ff f fcye
f
ff f f yg




   


(6)





 

*
1
*
2
212 212
=
4
11+1
4
D
D
D
y
f
f ffcyef ff g
fcye fyg
D




(7)































*
2
22
22
2
2
2
*
*
212
1
21 2
1111
+1 1 + 1
11 1 11
11+1
16
21
1
8
1
2
2
1
81
1
=2
D
M
D
R
D
f f ffcye
f
fffyg
f
ffyfgfcye
fcye fyg
f
fcyef fyg
fcye fyg
ff ff
f
k
cye
f
g








































2
2
2
22
2
12
1111
+1 1 + 1
11 1 11
11+1
16
11
2
ff yg
f
ffyfgfcye
fcye fyg
ffcyeff
k
yg
fcye y gfg













(8)
Proposition 3.2
(1) When
*
1
D
p


, there has
**
12
D
D
pp
; when
*
0
D
p

, there has
**
12
D
D
p
p
;
(2) When
*
1
D
d

, there has
**
12
D
D
DD
; when
*
0
D
d

, there has
**
12
D
D
DD
.
Among them,





*22
2
1
31 11 1
45
D
p
f
ff ffyg
ff




2
11
f
fcye

,





22
*
111 1
3
D
d
f
ffygfcye
f


,
**
0
DD
pd


.
Proposition 3.2 shows that when
*
0
D
p

, that
is, when consumer's preference for online channels
is at a small value, the retail prices of online direct
selling channels will be lower than that of offline
retailers, and the manufacturer's online direct selling
channels can obtain greater price advantages in the
Dual-channel supply chain of online direct selling.
When
*
1
D
d

is greater, the demands for online
direct selling channels is higher than that of offline
retailers; otherwise, the opposite is true.
Proposition 3.3
When
*
D
g
kk
, the manufacturer
has optimal carbon emission reduction level
*
D
g
, and
*
0
D
g
. It makes manufacturer's profit achieve
Pareto optimal.
Among them,


2
*
323
4
D
g
yf f f y
k

,





2
*
2
11 +23
4+233
D
yf f f f cye
g
kyf f y f



.
Proposition 3.3 when


2
323
4
y
fffy
k

,
the manufacturer obtain the optimal carbon emission
reduction level and maximize its profit. In addition,
manufacturer's carbon emission reduction level
increases with the increase of the consumer's carbon
emission reduction sensitivity coefficient
, which
indicates that increasing the consumer's carbon
emission reduction sensitivity coefficient can enable
manufacturer to increase the carbon emission
reduction level.
3.3 Pricing Model of Centralized
Supply Chain
In the centralized supply chain pricing model,
manufacturers and offline retailers regard the entire
supply chain system as an enterprise, they strive to
the win-win situation.
The profit function of centralized supply chain
system is:
Pricing Decision of Dual-Channel Supply Chain Based on Carbon Emission Reduction Input Under Carbon Tax Policy
129
 
1
1112 212
2
1
2
+
CC CC CCCCC C
C
yDEDPpc wcD w kg
 
2
112 2
1
2
CCCCC C
pcD Pc kyEDg 
(9)
Proposition 3.4 There are optimal retail prices,
sales volumes and profits for the manufacturer and
offline retailer:













22
*
1
2
22
*
2
2
1111
=
21
11 1 11
=
21
C
C
p
f
ffyfgfcye
f
f
fyfgfcye
f
p


   

(10)





*
1
*
2
11
=
2
111
=
2
C
C
D
yfgf cye
yg
D
f
fcye




(11)
























2
2
2
*
22
2
11+1
41
+1c +1 1
1
1
+1 1 + 1 + 1c
11
2
1+
1
C
C
ff f yfg
f
fye yfgfcye
f
fyfgf ye
yyggf e kfc





 


(12)
Proposition 3.5
(1) When
*
1
C
p


, there has
**
12
CC
p
p
; when
*
0
C
p

, there has
**
12
CC
p
p
;
(2) When
*
1
C
d


, there has
**
12
CC
DD
; when
*
0
C
d

, there has
**
12
CC
D
D
.
Among them,
*
1
=
2
C
p
,
*
1
=
2
C
d
.
Proposition 3.6
When
*C
g
kk
, manufacturer has
optimal carbon emission reduction level
*C
g
. It makes
the profit of manufacturer achieve Pareto optimal,
and
*
0
C
g
.
Among them,
*
1
C
g
kfy

,



*
21
21
C
y
fcye
g
ky fy


.
The proof process of Propositions 3.5 and 3.6 is
similar to Propositions 3.2 and 3.3.
Proposition 3.7
The profit and carbon emission
reduction level of centralized decision are higher than
that of decentralized decision.
**CD
gg g







2
1
214 233
yf
ky fy kyf f y f







21 2 1k y fy k y fy

 



22
274 23 43 0fkffy f ycye

When
**
D
C
g
g
, there is


***
11
16
1
CDD
CMR
f
cye





2
+1 0fyg

.
Proposition 3.7 shows that when manufacturer
invests the same carbon emission reduction level, the
manufacturer and retailer jointly set the wholesale
price and retail prices under centralized decision-
making, aiming at making the profit of the entire
system to maximize and pursue a win-win situation.
The sales prices of retailers increase, which leads to
the decrease of profits under the decentralized
decision.
Proposition 3.8
In two decision-making models,
there are following conclusions

,jDC
:
(1)
*
1
0
D
w
e
,
*
1
0
j
p
e
,
*
2
0
j
p
e
,
*
1
0
j
D
e
,
*
2
0
j
D
e
,
*
0
D
M
e
,
*
0
D
R
e
,
*
0
C
C
e
;
(2)
*
1
0
D
w
g
,
*
1
0
j
p
g
,
*
2
0
j
p
g
,
*
1
0
j
D
g
,
*
2
0
j
D
g
,
*
0
D
M
g
,
*
0
D
R
g
,
*
0
C
C
g
;
(3)
*
1
0
D
w
,
*
1
0
j
p
,
*
2
0
j
p
,
*
1
0
j
D
,
*
2
0
j
D
,
*
0
D
M
,
*
0
D
R
,
*
0
C
C
;
(4)
*
1
0
D
w
y
,
*
1
0
j
p
y
,
*
2
0
j
p
y
,
*
1
0
j
D
y
,
*
2
0
j
D
y
,
*
0
D
M
y
,
*
0
D
R
y
,
*
0
C
C
y
.
Proposition 3.8 shows that (1) It will increase
wholesale price and retail prices with the increase of
unit carbon emissions of products, resulting in the
decrease of demands and profits; (2) When carbon
emission reduction level increases, manufacturer and
offline retailer have pricing initiative, which
ultimately increase their profit; (3) When consumer
carbon emission reduction sensitivity coefficient is
higher, the profit of the whole supply chain will be
higher; (4) When the tax price of unit carbon
emissions increases, the wholesale price and retail
price increases.
ICEMME 2022 - The International Conference on Economic Management and Model Engineering
130
4 DUAL-CHANNEL SUPPLY
CHAIN PRICING DECISION
ANALYSIS
This paper uses MATLAB to further analyze the
impact of relevant parameters on pricing and supply
chain members' profits. Refer to the parameter
assignment in the study of xie et al. (2021), the
parameter values used in this paper are:
=40, =0.6, =0.6, 0.8, 21, 3.5, 0.265,fcky

4.93.e
4.1 Impact of Manufacturers' Carbon
Emission Reduction Level on
Pricing Strategy
(1) Decentralized decision
(2) Centralized decision
Figure 1: Impact of manufacturers' carbon emission
reduction level on pricing strategy.
It can be seen from Figure 1 that whether it is
decentralized decision-making or centralized
decision-making, the retail prices of offline retail
channels are greater than those
of online direct
selling channels. When the manufacturers' carbon
emission reduction level improve, the wholesale
prices, retail prices and the sales volumes
increase, ultimately increasing profits of
manufacturers and the offline retailers.
4.2 Impact of Carbon Emission per
Unit Product on Pricing Strategy
(1) Decentralized decision
(2) Centralized decision
Figure 2: Impact of carbon emission per unit product on
pricing strategy.
It can be seen from Figure 2 that whether it is
decentralized decision-making or centralized
decision-making, the increase of carbon emission
per unit product will increase the wholesale price
of manufacturers and retail price of online direct
sales channels and offline retailers. Due to the
existence of
consumer carbon emission reduction
sensitivity coefficient, the demands for online
direct sales channels and offline retailers will
decrease, and profits of manufacturers and offline
retailers will decrease.
priceprice
priceprice
Pricing Decision of Dual-Channel Supply Chain Based on Carbon Emission Reduction Input Under Carbon Tax Policy
131
4.3 Impact of Unit Carbon Emission
Tax on Pricing Strategy
(1) Decentralized decision
(2) Centralized decision
Figure 3. Impact of unit carbon emission tax on pricing
strategy.
As can be seen from Figure 3, the wholesale
prices of
manufacturers, the retail prices will
increase with the increase of unit carbon emission
tax prices. This shows that the collection of
carbon tax
makes manufacturers raise wholesale
prices and retailers raise retail prices to reduce the
cost of carbon tax policy.
4.4 Profit Comparison Analysis
It can be seen from Figure 4 that the profits of
manufacturers and offline retailers under centralized
decision-making are greater than those of
decentralized decision-making. When making
centralized decisions, it can narrow the profits gap
between manufacturers and offline retailers.
(1) Decentralized decision
(2) Centralized decision
Figure 4. Profit comparison between decentralized
decision and centralized decision.
5 CONCLUSIONS
The main conclusions of our paper are as follows:
(1) The profits and carbon emission reduction level
under centralized decision making are higher than
those under decentralized decision making. (2)
When the consumer carbon emission reduction
sensitivity coefficient is higher, the profit of the
whole supply chain will be higher. (3) Supply chain
members' profits are positively correlated with the
tax price of unit carbon emissions and unit carbon
emission of the product; they are negatively
correlated with consumer carbon emission reduction
sensitivity coefficient.
Manufacturers should increase the cost of carbon
emission reduction and reduce the unit carbon
emissions of products. The government can
encourage manufacturers to invest in carbon
emission reduction through carbon tax discounts and
other ways.
Future research can explore the pricing strategies
from the perspective of government subsidies. The
priceprice
profitprofit
ICEMME 2022 - The International Conference on Economic Management and Model Engineering
132
asymmetric carbon information also should be
considered in the future. The pricing decisions and
channel selection problems for these complex
channel structures also can be further studied.
ACKNOWLEDGEMENTS
This article is supported by the reform and develop
high-level talent projects in local universities
supported by the central government (2020GSP13),
National Social Science Foundation of Heilongjiang
Province (No.20GLB114), Social Science
Foundation Think Tank Project of Heilongjiang
Province (No.21ZK032).
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