Events - September 2018

This paper investigates the impacts of two environmental policies: pollution abatement subsidy and emission tax, on a three-tier supply chain, where the manufacturer distributes via multiple competitive retailers and invests in a pollution abatement technology in manufacturing. The government pursues social welfare maximization, while the manufacturer and retailers are profit driven. We find that the subsidy policy offers the manufacturer greater incentives to abate pollution and yields higher profits for channel members.