Abstract:

【Objective】 Regarding the carbon cap-and-trade scheme, we explored whether a forest company can use an internal financing mechanism within the wood forest product supply chain to ease its financing pressure, and how different factors, such as carbon emission cap and discount coefficients, affect the decision variables of each member and the overall profit of the supply chain.【Method】 By constructing the Stackelberg game model, the optimal strategy of the member of the supply chain under an advance payment financing mechanism is studied. After comprehensively considering relevant research literature and the actual situation of the wood forest product supply chain, appropriate numerical parameters were selected, which were used to analyze and compare the profit levels of the wood forest product supply chain under internal and external financing mechanisms. 【Result】 The results show that when the discount rate of wood and carbon sink prices is within the appropriate range, the profit levels of the forest company as well as the manufacturers under internal financing mechanisms are higher than under external financing mechanisms. Under the internal financing mechanism, the scale of the carbon sink forest decreases as the discount rate of wood, carbon sink prices and carbon emission limits increase, which increases with greater government subsidies for carbon sink forest. In addition, the unit carbon emission reduction of the manufacturers increases with a higher discount rate of wood and carbon sink prices and decreases with greater carbon emission limits and government subsidies for carbon sink forest. 【Conclusion】 Within the supply chain, the forest company’s internal financing from the manufacturing company not only solves its own financing problems and improves the emission reduction level of the manufacturer, but also improves the overall environment and economic performances of the supply chain. The government can play the role of a market leader, promote cooperation between the upstream forest company that lacks funds and the downstream manufacturer that is responsible for emission reduction tasks, and implement advance payment internal financing mechanisms, thereby reducing the financing costs and emission reduction costs of the entire supply chain, and achieve the Pareto optimum of the supply chain.

Key words: cap-and-trade, wood forest products, carbon sink forest, supply chain, internal financing