Reselling or marketplace mode for an online platform: the choice between cap-and-trade and carbon tax regulation

This paper explores a manufacturer’s production decisions and a government’s choice between cap-and-trade and carbon tax regulation. The manufacturer sells its product through offline and online channels, and we consider the online-offline spillover effect (OOSE) to reflect the influence of online s...

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Bibliographic Details
Published in:Annals of operations research Vol. 310; no. 1; pp. 293 - 329
Main Authors: Yu, Yugang, Li, Xue, Xu, Xiaoping
Format: Journal Article
Language:English
Published: New York Springer US 01.03.2022
Springer
Springer Nature B.V
Subjects:
Business and Management
Carbon
Coefficients
Combinatorics
Damage
E-commerce
Emissions credit trading
Emissions trading
Environmental aspects
Environmental tax
Manufacturing industry
Methods
Online sales
Operations research
Operations Research/Decision Theory
S.i. : Mim2019
Sales
Tax rates
Tax regulations
Theory of Computation
China
Social welfare
Cap-and-trade
Online-offline spillover effect
Carbon tax
Online platform
ISSN:0254-5330, 1572-9338
Online Access:Get full text
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Summary:This paper explores a manufacturer’s production decisions and a government’s choice between cap-and-trade and carbon tax regulation. The manufacturer sells its product through offline and online channels, and we consider the online-offline spillover effect (OOSE) to reflect the influence of online sales on offline sales. We further compare carbon emission, the manufacturer’s profit, and social welfare for reselling and marketplace modes under the two types of regulations. First, we find that under both policies, when the government allocates a tight cap (high tax rate), the manufacturer should decrease online sales if the OOSE increases, and vice versa. Interestingly, we also discover that the manufacturer’s profit may decrease with the cap regardless of the modes. Second, under a low (high) environmental coefficient, the social welfare using reselling mode is lower (higher) than using marketplace mode, and the two modes can generate the same social welfare under a moderate environmental coefficient. Third, using either mode, when the environmental damage coefficient is low (high), the government should implement cap-and-trade regulation (carbon tax regulation). Finally, based on the data of a real-world company, when the environmental damage coefficient is low (high), the company should use an online platform with marketplace (reselling) mode to achieve optimal profit.
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SourceType-Scholarly Journals-1
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ISSN:0254-5330
1572-9338
DOI:10.1007/s10479-021-04250-6