Abstract: The fairness concerns of supply chain firms has been regarded as a vital role in developing and sustaining benign cooperation relationships between upstream and downstream in the supply chain. Confronted with consumers’ low-carbon preferences and the constraints of carbon emission regulations, supply chain firms often show a strong fairness concerns when determining operational decisions such as optimal pricing and emission reduction levels. Exploring how fairness concerns affect supply chain operational decisions under environmental protection regulations can provide countermeasures for supply chain cooperation. In a two-echelon supply chain composed of a single manufacturer and a single retailer, under the carbon cap-and-trade mechanism, the optimal operational decisions are studied such as pricing and carbon-emission reduction when the manufacturer and retailer are fairness concern, and the impact of fairness concern on the optimal pricing and carbon emission reduction and the expected profit is analyzed. The coordination performance of the revenue- sharing and cost-sharing contract also investigated for the supply chain. Finally, several numerical experiments are given to verify the main theoretical results. The results show that: (1) when both manufacturers and retailers are fairness concerns, the supply chain can achieve coordination if the parameters of revenue-sharing and cost-sharing contract satisfy some conditions. (2) The wholesale price is positively correlated with the manufacturer’s fairness concerns, and the retail price is positively correlated with the manufacturer’s and retailer’s fairness concern. If the manufacturer considers the retailer’s fairness concern, the change of the wholesale price depends on the carbon-emission reduction cost coefficient, and the carbon emission reduction rate is negatively correlated with the manufacturer’s and retailer’s fairness concern. If the manufacturer ignores the retailer’s fairness concern, the wholesale price is only affected by the manufacturer’s own fairness concern, and the carbon- emission reduction rate is negatively correlated with the manufacturer’s fairness concern and has nothing to do with the retailer’s fairness concern. (3) The profits of both sides will be negatively correlated with manufacturer’s fairness concern, and the retailer’s concerns about fairness will also have a negative impact on the manufacturer’s profits. The change of the retailer’s profits with his own fairness concern depends on whether the manufacturer considers retailer’s fairness concern, if manufacturer considered retailer’s fairness concern, both are positive correlation, otherwise both are negative correlation.

Key words: carbon cap-and-trade; fairness concern; pricing; coordination