Impacts of financing mechanism and power structure on supply chains under cap-and-trade regulation

This paper develops a low-carbon supply chain consisting of a capital-constrained manufacturer and a capital-abundant retailer where bank loans and early payment are investigated. Under each power structure, there always exists a financing equilibrium, i.e., early payment. Compared with bank loans, early payment could produce lower carbon emissions and higher social welfare in the retailer-led power structure; but it damages environment and social welfare, and leads to the conflict between profitability and environmental goals in the manufacturer-led case. Finally, impacts of power structure on financing mechanism, carbon emissions, and performance are analyzed to provide more managerial implications.