Research on financing strategy of low-carbon supply chain based on cost-sharing contract

Abstract

The paper considers a low-carbon supply chain which consists of a capital constrained manufacturer and a retailer. We consider the retailer takes part in low-carbon cost sharing when the manufacturer faces capital constraints due to increasing investment in low-carbon production technologies. We further construct and analyze the performance of the supply chain under three financing strategies: capital constraint without financing (NF), trade credit financing (TCF), and bank credit financing (BCF). Our model provides a financing decision-making model for a low-carbon supply chain with capital constraints, and we design a cost-sharing contract can coordinate supply chain and strengthen the cooperation between enterprises. Moreover, through numerically analyzing the impact of cost-sharing ratio, low carbon preference coefficient of consumers, and interest rate on supply chain decisions and profits, we find (i) the profit of low-carbon supply chain members with capital constrain under TCF strategy is always better than BCF strategy; (ii) cost-sharing contract can increase the profit of the manufacturer and the retailer; and (iii) the low carbon preference coefficient of consumers is also a positive factor in the optimal profit of the manufacturer and retailer.

Keywords: Bank credit financing (BCF); Capital constraint; Cost-sharing contract; Low-carbon supply chain; Trade credit financing (TCF).