Implementation of low carbon industrial symbiosis systems under financial constraint and environmental regulations: An evolutionary game approach

Abstract In the industrial symbiosis system, financial support has been proven to be key factors to motivate cooperation. However, current studies don’t explain the incentives to implement the low carbon industrial symbiosis. This paper considers a low carbon industrial symbiosis chain with one upstream manufacturer and one downstream manufacturer with the financial constraint. Under the environmental regulations, e.g., carbon tax and cap-and-trade, we investigate the financing preferences of the low carbon industrial symbiosis systems from a competing bank or trade credit by an evolutionary game model. It finds that external finance serves as a necessary financing way for manufacturers regardless of which manufacturer takes the responsibility of reducing carbon emission. Further, an appropriate combination of internal and external finance has a positive impact on the operation of a low-carbon industrial symbiosis system. The financing platform for manufacturers and cap-and-trade strategy promotes the implementation of carbon emission reduction responsibilities. Besides, we present a set of numerical analyses to investigate the sensitivity of inside and outside factors in industrial symbiosis systems, and we analyze the impacts of key parameters on the performance of low carbon industrial symbiosis system.