Impacts of carbon emission policies on the supply chain based on system dynamics

With the increasingly serious situation of global warming, governments all over the world have adopted various carbon emission policies to strengthen the carbon regulation to enterprises and supply chains. This paper builds a supply chain (two-echelon supply chain, one producer and one retailer) carbon emissions model based on the theory of System Dynamics. We introduce the carbon emission polices of carbon caps and carbon trading into the model, and observe the impacts of the changes of policies on the supply chain under several different scenarios. The results show that only the carbon caps policy is set reasonably, can prompt supply chain to reduce carbon emissions, and also realize the increase of total profits at the same time. In the model of carbon trading policy, the supply chain will make different decisions when the carbon-trading price changes. The conclusions can provide suggestions for the government to make carbon emission policies, and give references to the decisions of supply chain.