Impact of carbon tax on enterprise operation and production strategy for low-carbon products in a co-opetition supply chain

Abstract Carbon tax mechanisms efficiently guide enterprises toward carbon emission reduction. This study simultaneously considered competition and cooperation within companies and developed four Stackelberg game theory–based models for a co-opetition supply chain consisting of two manufacturers to explore the production and operation strategies in the context of a carbon tax mechanism. According to the game models, the optimal operation strategies for manufacturers, such as optimal product pricing, product productivity, and supply chain member profits were derived. Then, we established equilibrium strategies between different production combinations to analyze the effects of carbon tax and market competition on low-carbon product selection. The following critical results were obtained. First, the proportion of revenue obtained by the upstream manufacturer through the wholesale provision of core components to total revenue exhibits no relation to the carbon tax rate when two manufacturers choose to produce the same products; it is only affected by market competition intensity. Second, the product strategy of the downstream manufacturer is not affected by the product selection strategy of the upstream manufacturer but is only affected by the rate of carbon tax and the unit cost of the low-carbon product. Numerical analysis was performed to provide insight into the implications of carbon tax on related factors of operation and manufacturer production strategies. This research integrates the co-opetition supply chain and carbon tax mechanism to enrich related literature and provide valuable guidance for manufacturers and policy makers.