Optimal Financing Decision for Manufacturers with Shortage of Emission Reduction Funds

DOI: https://doi.org/10.62517/jse.202411102

Author(s)

Changzhe Feng1, Chengdong Shi1,*, Hui Li1, Weitong Yu2, Zhiyao Zhang3

Affiliation(s)

1College of Management, Shandong University of Technology, Zibo, Shandong, China 2College of Economics and Management, Shandong Huayu College of Technology, Dezhou, Shandong, China 3Zibo Experimental Middle School, Zibo, Shandong, China *Corresponding Author.

Abstract

Focusing on the problem of LCER capital constraints of small and medium-sized manufacturing enterprises, a manufacturer financing decision model with no financing decision (MODE1), retailer cost-sharing decision (MODE2), bank loan decision (MODE3) and mixed decision of bank loan and retailer sharing (MODE4) are constructed in the context of considering two financing models of bank loan and retailer cost-sharing to analyze the financing decision of key factors, such as manufacturer's initial capital for emission reduction. The study finds that:(i) manufacturers' optimal financing decision differs at different initial funds for emission reduction; when the funds for emission reduction are insufficient, manufacturers' adoption of the mixed decision of bank loans and retailer sharing (MODE4) is more effective in improving supply chain performance, and when the funds for emission reduction are sufficient, the retailer cost-sharing decision (MODE2) is the optimal choice for supply chain members; (ii) the implementation of the cost-sharing decision and the increase of the low-carbon preference coefficient in the supply chain both increase manufacturers' retailer expected utility, and the increase of retailer expected utility is more significant, which is conducive to promoting the relief of manufacturers' financial pressure and the improvement of the level of LCER.

Keywords

Low Carbon Financing, Cost Sharing; Low-Carbon Emission Reduction (LCER); Initial Funding; Consumer Low Carbon Preference

References

[1] Zhang Xiaochen. Status quo, problems and countermeasures of financing the construction of low-carbon economy in China. Journal of Graduate School of Chinese Academy of Social Sciences, 2016, (06):58-63. [2] Wang Jianxin. International multilateral development banks and global trade growth: the case of joining the ADB. World Economy, 2022, 45(12):3-28. [3] Zhang Xiaoyan, Shu Lei. The experience and inspiration of coal power transformation in the United States and Europe. Southern Finance, 2022,(11):65-73. [4] Zhang Chong, Wang Yaxian, Liu Tianliang. Analysis of financing decision of green supply chain under chain and chain competition. Journal of Management Engineering, 2022, 36(02):159-172. [5] Tang R, Yang L. Impacts of financing mechanism and power structure on supply chains under cap-and-trade regulation. Transportation Research Part E: Logistics and Transportation Review, 2020, 139. [6] Ding Z G, Xu H W, Xu Q. A study on low-carbon technology adoption decision of supply chain supported by green credit. Soft Science, 2020, 34(12):74-80. [7] Zhang Xiaran, Wang Natural, Lan Chuanxiao et al. A study on green production decision-making in supply chain considering government subsidy under supplier's financial constraint. Journal of Management, 2022, 19(02):280-288. [8] Zhang Xiaodi, Liu Xueyue. Study on carbon tax and development of renewable energy--an analysis of growth and welfare effects based on OLG-CGE model. China Industrial Economy, 2015, 324(03):18-30. [9] Correia F, Howard M, Hawkins B, et al. Low carbon procurement: an emerging agenda. Journal of Purchasing & Supply Management, 2013, 19(1):58-64. [10] Fu JY, Dai YT. Cost and welfare analysis of carbon trading market linkage - an empirical study based on MAC curve. China Industrial Economy, 2015, 330(09):84-98. [11] Meng Qingchun, Pan Jian, Wang Natural et al. Research on unified credit line allocation of core enterprises based on low-carbon financing needs of small and medium-sized suppliers. China Management Science: 1-12[2023-03-23]. [12] Xing Enfeng, Shi Chengdong, Yan Xiuxia, et al. Research on collaborative low-carbon emission reduction of enterprises under three-dimensional trading model. China Management Science, 2020, 28(03):174-181.