Game Analysis Between Manufacturer and Retailer Under Carbon Tax Policy

Considering consumers’ low-carbon preferences, this article analyzes a manufacturer’s price and carbon abatement strategies, as well as a retailer’s price and promotion strategies, in a centralized game, where the manufacturer and the retailer jointly make decisions, and a decentralized game, where the two parties each make decisions simultaneously. This study discusses the impact of the carbon abatement cost coefficient, promotion cost coefficient, sensitivity coefficient of consumer demand to carbon abatement rate or promotion rate, or carbon tax rate on the manufacturer’s carbon abatement rate, commodity’s retail price, and retailer’s promotion rate. This article also discusses the impact of any one of the main parameters on supply chain profit. Through comparisons of the above two games, this article concludes that the former is better than the latter for firms, consumers, and the environment. This article also concludes that a reduction in the carbon abatement cost coefficient, a rise in the sensitivity coefficient of consumer demand to the carbon abatement rate, or a rise in the carbon tax rate increases the manufacturer’s optimal carbon abatement rate. A relatively high carbon abatement rate means relatively low CO2 emissions, which are environmentally friendly and conducive to sustainable development at the ecological level. The foregoing conclusions provide governments with references for making carbon tax policies and also offer firms references for making decisions.