Abstract: In the low carbon economy, carbon emission rights, as a scarce, tradable resource, have radically overturned the competition law, cost structure and profit model for traditional firms. It is also regarded as key object of supply chain contract optimization and coordination. For supply chains, firstly, in decentralized decision mode, dual marginalization effect easily occurs due to local optimization based on players' individual interests. Secondly, for most research concerning supply chain contract coordination and optimization, full rationality is always assumed for decision makers. However, in real management practices, full rationality to maximize its profit is not the case at all. Partial rationality preference such as pursuit of fairness is the same prominent in reality. With the help of game theory, a supply chain composed of one manufacturer and one retailer is established considering their fairness preference from a low carbon view.Respectively with and without fairness preference, two types of pricing contracts proposed by the manufacturer when facing favorable and unfavorable unfair profit allocations are studied to see if coordination could be realized or not. And related issues including coordination parameters setting is also touched on when coordination reached for the supply chain.
Results show that both pricing contracts could coordinate the supply chain if the manufacturer prefers fairness and meanwhile, the retailer takes maximal profit as its goal. The utility of manufacturer and retailer's profit relate only to fairness benefit parameter of the manufacturer, when the manufacturer faces unfavorable and unfair profit allocations. When the manufacturer meets favorable but unfair allocation, comparison between negative utility of such allocation and fair benefits the manufacturer hopes to get works in the supply chain profit allocation. When 1/1+μ_m< β_m< 1, the manufacturer will monopoly the whole profit in the supply chain and the retailer's profit is zero without any interests driving it. But such a case seldom happens although both contracts can work. When fairness is preferred by both sides, when α_m >1+α_r/α_rμ_mμ_r-α_r-1 in competitive supply chains, the retailer gets negative utility with wholesale price higher than its marginal cost. Under such circumstances, the retailer has no incentives to join both pricing contracts, thus failing to coordinate the supply chain.

Key words: fairness preference, low carbon, supply chain contract, two part tariff