As it has become a worldwide concern that how to reduce carbon emissions effectively, more and more firms take low-carbon operations into account when producing and selling eco-friendly products. On one hand, in China, the reform of carbon-emission-trading provides firms with new opportunities to develop the market; on the other hand, the increment of environmental awareness makes consumers prefer eco-friendly products. So,in this paper, the integrated impact of carbon-emission-trading mechanism and consumer environmental awareness on duopoly enterprises is investigated. A two-stage duopoly competition model is built, where two manufacturers simultaneously decide the investment levels on low-carbon technologies in the first stage and then simultaneously set the selling prices of their products in the second stage. Based on that, the backward induction method is adopted to derive the optimal decisions about the low-carbon investment and the selling price for each firm. Similarly, another scenario wherein both firms are assumed as the price takers is dissussed, which means that the product selling price is exogenously decided by the market. Under either scenario, comparative analysis is also implemented based on the equilibrium results for two manufacturers with unequal initial market shares. The results reveal that the carbon-emission-trading price, the unit environmental improvement cost and the consumer environmental awareness jointly exert a significant effect on firms' optimal strategies, including both the carbon reduction investment strategy and the pricing strategy. In specific, our main findings are concluded as follows:1) No matter whether the duopoly manufacturers are price takers or not, there always exist the equilibrium results. 2) When the cost of emission reduction technologies is high and the price of carbon emission permits is low, the firm with a larger initial market share will invest more on new technologies; but when the investment cost becomes low and the permit price becomes high, the firm with a smaller initial market share tends to invest more on the new technologies to attract more consumers with high environmental awareness. 3) The numerical results show that the firm with a larger initial market share will make more profit when the investment cost is high and the permit price is low, but when the investment cost becomes very low and the permit price becomes very hign the firm with a smaller initial market share could make even more profit than the larger firm. However, the numerical studies also imply that the reverse that the smaller firm exceeds the larger firm in the aspect of either the emission reduction level or the profit occurs rarely. All in all, the integrated impacts incured by the carbon-emission-trading price, the carbon reduction investment cost and the consumer environmental awareness on the duopoly firms' competitive strategies about low-carbon investment and pricing are investigated. The equilibrium results provide an important managerial insight that the smaller firm can make more profit than the larger firm if he seizes the opportunity of carbon-emission-trading mechanism to increase the investment on low-carbon technologies when either the cost on new technologies is very low or the trading price of carbon emission permits is very high.
DENG Wan-jiang, MA Shi-hua, GUAN Xu
. Duopoly Enterprises' Strategies for Consumer Environmental Awareness under Carbon-Emission-Trading Mechanism[J]. Chinese Journal of Management Science, 2017
, 25(12)
: 17
-26
.
DOI: 10.16381/j.cnki.issn1003-207x.2017.12.003
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