Navigating the Carbon Challenge: Strategic Integration of Hybrid Policies in Green Supply Chains

Round 1

Reviewer 1 Report

Comments and Suggestions for Authors

This article makes a certain contribution by constructing a dual layer supply chain model to explore the impact of carbon taxes, emissions trading, and mixed policies on carbon reduction strategies and pricing decisions. The report reveals that hybrid policies can achieve the lowest unit carbon emissions among low polluting manufacturers, providing strategic insights for businesses to balance profitability and sustainability. However, for publication in journals, the paper still needs further improvement and supplementation.

1. Although research on carbon reduction strategies is limited, the author needs to supplement relevant studies in the introduction to highlight the necessity of this research.
2. How to balance the game between manufacturers and retailers in terms of carbon reduction and profit maximization under a dual policy (combining carbon tax and carbon emissions trading)?
3. Why can hybrid policies achieve the lowest unit carbon emissions when the manufacturer's initial pollution level is below the critical threshold? Please add this point in the introduction of the article.
4. How to optimize pricing decisions and emission control strategies in the supply chain based on the implementation costs of carbon taxes and emissions trading under different policy scenarios?
5. The font size and format of formulas in the text need to be standardized, and the numbering should cover all formulas.
6. Can the optimal carbon reduction strategy and Stackelberg game framework under reverse induction be applied to other industries or regions?
7. Will dual policies lead to unstable carbon emissions trading or market distortions, and how can we avoid such risks?
8. How to share the interests of different participants in the green supply chain to ensure long-term sustainability under mixed policies?
9. The research results indicate that mixed policies are more effective for manufacturers with low pollution levels. Does this mean that high polluting industries will face higher emission reduction costs?
10. Can the combination of carbon tax and emissions trading policies be widely promoted globally, or is it limited to specific regions or industries?
11. How can manufacturers optimize their long-term carbon reduction and pricing strategies under policy uncertainty, such as carbon tax adjustments and changes in emission quotas, within a mixed policy framework?
12. In the outlook for future research, the author should focus on how to apply carbon reduction strategies to enterprise management and on-site practice through a series of adjustments and optimizations.
13. A typical carbon emitting industry is the coal industry. Does the author need to introduce this case study to ensure the applicability of the mixed policy model to carbon emissions?

Comments on the Quality of English Language

Some of the sentences are in colloquial English, and the author is advised to optimise and improve the language of the article

Author Response

Comment 1：Although research on carbon reduction strategies is limited, the author needs to supplement relevant studies in the introduction to highlight the necessity of this research.

Response 1: Thank you for your suggestion. We have added relevant studies in the introduction to highlight the necessity of this research. The additional references emphasize the importance of combining carbon tax and carbon trading mechanisms in promoting emission reductions and the transition to sustainable practices.

Comment 2: How to balance the game between manufacturers and retailers in terms of carbon reduction and profit maximization under a dual policy (combining carbon tax and carbon emissions trading)?

Response 2: Thank you for your valuable suggestion. This study abstracts the rules of carbon tax and carbon emission trading into a profit maximization game model. The balance between the two is reflected in the optimal decision-making process. Specifically, for manufacturers, the optimal wholesale price and emission reduction rate are determined, while retailers aim to set the optimal sales price. Only through this, under the dual policy of carbon tax and carbon emission trading, can both manufacturers and retailers balance their emission reduction requirements and profit maximization​.

Comment 3: Why can hybrid policies achieve the lowest unit carbon emissions when the manufacturer's initial pollution level is below the critical threshold? Please add this point in the introduction of the article.

Response 3: We appreciate the reviewer’s suggestion. In response, we have added further explanation in the introduction regarding why the hybrid policy achieves the lowest unit carbon emissions when the manufacturer's initial pollution level is below a critical threshold. We clarified how the synergistic effect of both the carbon tax and emission trading mechanisms provides a stronger incentive for emission reductions in low-pollution firms, leading to more efficient reductions and lower overall emissions

Comment 4: How to optimize pricing decisions and emission control strategies in the supply chain based on the implementation costs of carbon taxes and emissions trading under different policy scenarios?

Response 4: Thank you for your valuable suggestion. In Section 4, this study considers different policy scenarios and obtains the optimal pricing and emission reduction rate decisions based on the implementation costs of carbon tax and carbon emissions trading. A more in-depth analysis is carried out in Section 5, which shows that the pricing decision and emission control strategy in the supply chain can be optimized by choosing the most appropriate decision under different policy scenarios based on the initial carbon emissions of the enterprises. "Optimization of Manufacturer's Emission Reduction Level: When the initial unit carbon emissions of the manufacturer are below a critical threshold, the government's adoption of a hybrid policy involving carbon tax and carbon trading can induce the manufacturer to achieve a higher level of emission reduction, thereby enhancing the effectiveness of optimal emission reduction strategies."

Comment 5: The font size and format of formulas in the text need to be standardized, and the numbering should cover all formulas.

Response 5: We have standardized the font size and format of all formulas, with numbering now covering all formulas except for equations 34 and 35, which are long, so the font size was adjusted accordingly.

Comment 6: Can the optimal carbon reduction strategy and Stackelberg game framework under reverse induction be applied to other industries or regions?

Response 6: Thank you for your suggestion. The emission reduction strategy and framework under the current conditions are applicable to the current industry. If applied to other industries or regions, the model can be adjusted and recalculated to obtain the optimal emission reduction strategy for those contexts.

Comment 7: Will dual policies lead to unstable carbon emissions trading or market distortions, and how can we avoid such risks?

Response 7: Thank you for your valuable suggestion. Carbon tax and carbon emission trading are two pivotal policy instruments for reducing carbon emissions. The absence of effective synergy in their design and implementation may result in instability or market distortion within the carbon emissions trading market. These risks can be mitigated through enhanced policy coordination, refined market mechanisms, and robust incentive structures. In this study, enterprises can be encouraged to develop new abatement technologies to reduce abatement costs. This research has demonstrated that when the abatement cost coefficient falls below a certain threshold, the hybrid policy achieves superior per-unit carbon emission reductions, manufacturer profits, and retailer profits compared to the carbon allowance policy, thereby leading to a Pareto improvement for the government, manufacturers, retailers, and consumers.

Comment 8: How to share the interests of different participants in the green supply chain to ensure long-term sustainability under mixed policies?

Response 8: Thank you for your valuable suggestion. Under a hybrid policy, adopting the equilibrium decision as determined in this study ensures optimal outcomes for all stakeholders within the supply chain. However, to guarantee long-term sustainability, it is imperative to incentivize manufacturers to implement measures aimed at reducing emission mitigation costs, thereby achieving Pareto improvement .

Comment 9: Theresults indicate that mixed policies are more effective for manufacturers with low pollution levels. Does this mean that high-polluting industries will face higher emission reduction costs?

Response 9: Thank you for the insightful comment. The results indeed suggest that the hybrid policy is more effective for low-pollution manufacturers. However, this does not necessarily imply that high-pollution industries will face disproportionately higher emission reduction costs under the hybrid policy. While high-pollution industries may initially have higher emissions and face greater challenges in reducing them, the hybrid policy offers flexibility through both carbon tax and trading mechanisms, which could help mitigate the cost of emission reductions over time . Further investigation into the cost dynamih-pollution industries could provide deeper insights into this aspect. The relevant modifications have been added in the conclusion section.

Comment 10: Can the combination of carbon tax and emissions trading policies be widely promoted globally, or is it limited to specific regions or industries?

Response 10: Thank you for the question. The combination of carbon tax and carbon trading policies has potential for global adoption, but its feasibility depends on regional and industry-specific factors. In regions with strong environmental regulations and advanced infrastructure, such as Europe and North America, this hybrid approach may be easier to implement. However, in developing regions or high-emission industries with limited technological capacity, challenges may arise. Therefore, while the hybrid policy shows promise, its implementation should be tailored to specific contexts to maximize its effectiveness .

Comment 11: How can manufacturer their long-term carbon reduction and pricing strategies under policy uncertainty, such as carbon tax adjustments and changes in emission quotas, within a mixed policy framework?

Response 11: Thank you for your valuable suggestions. The uncertainties surrounding carbon tax adjustments and changes in emission allowances are crucial for enhancing research on hybrid policies, which will be further investigated in this study. Presently, the study centers on comparing supply chain emission reduction strategies and pricing strategies across various scenarios involving carbon taxes, carbon trading, and hybrid policies. This aspect has been incorporated into the section on study limitations. "Model Establishment in Dynamic Environments: Acknowledging the continuous changes in the real environment, future research can construct dynamic models to better align with real-world situations and effectively respond to the uncertainties surrounding carbon tax adjustments and emission trading changes."

Comment 12: In the outlook for future reseauthor should focus on how to apply carbon reduction strategies to enterprise management and on-site practice through a series of adjustments and optimizations.

Response 12: Thank you for your valuable suggestion. We have revised the future research directions section based on your feedback, emphasizing how emission reduction strategies can be optimized and applied more effectively in business management and real-world practices. We have included considerations of additional external factors, such as market competition and fluctuations in the international carbon market, and suggested that future research could expand to multilevel supply chain structures and dynamic modeling in real-world contexts . We believe these additions will enhance the practical relevance of t stronger decision support for sustainable development moving forward.

Comment 13: A typical carbon-emitting industry is the coal industry. Does the author need to introduce this case study to ensure the applicability of the mixed policy model to carbon emissions?

Response 13: Thank you for your valuable suggestion. As a typical carbon emission industry, the coal industry has certain specialization, and this study focuses more on the optimal emission reduction strategy and profit maximization strategy under different policy scenarios, and abstracts the manufacturer and retailer in the supply chain as the game objects. The coal industry can be singled out for more in-depth and professional model analysis, which will be the content of further in-depth analysis in the future.

Reviewer 2 Report

Comments and Suggestions for Authors

In the manuscript entitled “Navigating the Carbon Challenge: Strategic Integration of Hybrid Policies in Green Supply Chains”, the authors explore the impacts of carbon taxes, carbon emissions trading and hybrid policies on abatement strategies and pricing decisions by modelling a two-tier supply chain including manufacturers and retailers, and solving for optimal strategies using backward induction in the framework of the Stackelberg game. The importance of designing policies flexibly based on the initial emission levels and abatement costs of enterprises is emphasized in order to optimize both economic and environmental benefits. I suggest accepting this manuscript after the following issues have been properly resolved.

 

 

1. The manuscript assumes that market demand is a linear function of price and that unit carbon emissions are constant (D=Q-bp+gt). However, in reality, consumer preferences for green products may exhibit non-linear characteristics. Does this linear assumption overestimate or underestimate the incentive effect of the policy on emission reduction? Can the robustness of the conclusions be verified by introducing a non-linear demand function?
2. In the manuscript, the study focuses on the short-term equilibrium under a static policy framework, but in practice, the carbon tax rate, carbon quota allocation and carbon price may be dynamically adjusted with the policy objectives or market fluctuations. If a dynamic game is considered, will the emission reduction investment and pricing strategies of enterprises exhibit path dependence? Are the policy effects in the long-term dynamic equilibrium consistent with the static analyses?
3. Current models are limited to a single manufacturer-retailer two-tier structure, whereas real supply chains often include multiple tiers of suppliers, logistics providers and consumer feedback mechanisms. If extended to a multi-layer network, what is the transmission mechanism of hybrid policies to the various levels of decision-making?
4. Numerical analyses rely on theoretical model parameters and lack validation by actual firm data or cross-country policy cases studies. Are the supply chain abatement effects of real-life hybrid policies consistent with model predictions? (DOI: 10.1002/anie.202114450, DOI: 10.1039/d3ee02196c)

Comments on the Quality of English Language

The English in the article is well written.

Author Response

Comment 1: The manuscript assumes that market demand is a linear function of price and that unit carbon emissions are constant (D=Q-bp+gt). However, in reality, consumer preferences for green products may exhibit non-linear characteristics. Does this linear assumption overestimate or underestimate the incentive effect of the policy on emission reduction? Can the robustness of the conclusions be verified by introducing a non-linear demand function?

Response 1: Thank you for your valuable suggestion. Your insight that "non-linear characteristics may affect policy incentives" is very enlightening, and we fully agree with the theoretical value of this issue. However, the use of a linear demand function (D=Q-bp+gt) and the assumption of constant carbon emissions per unit in this paper is based on the conventional simplification of similar studies in the existing literature (reference: B. Li, Zhu, Jiang, & Li, 2016). The core purpose of this assumption is to focus on the equilibrium analysis of policy parameters. To further ensure the robustness of the conclusions, we have included a sensitivity analysis in Section 5. In this section, we verify the robustness of the conclusions by adjusting the value intervals of the initial carbon emissions and carbon trading price with reference to the historical records of international carbon emissions trading. The hypothesis of "non-linear characteristics of consumers' green preferences" is now included in future research. Your suggestion has provided us with important ideas, and we sincerely look forward to discussing this further in our follow-up work.

Comment 2: In the manuscript, the study focuses on the short-term equilibrium under a static policy framework, but in practice, the carbon tax rate, carbon quota allocation, and carbon price may be dynamically adjusted with the policy objectives or market fluctuations. If a dynamic game is considered, will the emission reduction investment and pricing strategies of enterprises exhibit path dependence? Are the policy effects in the long-term dynamic equilibrium consistent with the static analyses?

Response 2: Thank you for your valuable suggestion. Dynamic games are indeed better suited to depict the changes in carbon tax rates, carbon quota allocation, and carbon prices in response to policy objectives, which is crucial for studying emission reduction and pricing strategies in green supply chains. This study focuses on the behaviors and decisions within the supply chain under the static scenarios of carbon tax policy, carbon emissions trading mechanisms, and a hybrid combination of these policies, aiming to understand the optimal strategies of firms under different policy frameworks. The path dependence of corporate emission reduction investments and pricing strategies under dynamic policy frameworks, and the policy effects in the long-term dynamic equilibrium, will be explored as part of future research in this area.

Comment 3: Current models are limited to a single manufacturer-retailer two-tier structure, whereas real supply chains often include multiple tiers of suppliers, logistics providers, and consumer feedback mechanisms. If extended to a multi-layer network, what is the transmission mechanism of hybrid policies to the various levels of decision-making?

Response 3: Thank you for your valuable suggestion. Constructing a multi-layered supply chain network is indeed more relevant to real-world situations and is important for understanding decision-making at all levels within a hybrid policy framework. In this study, we have focused on a single two-tier supply chain structure to simplify the analysis and concentrate on optimal decision-making in different policy scenarios. The extension of this study to multi-layer networks, considering the transmission mechanisms of hybrid policies at various decision-making levels, will be an important direction for future research.

Comment 4: Numerical analyses rely on theoretical model parameters and lack validation by actual firm data or cross-country policy case studies. Are the supply chain abatement effects of real-life hybrid policies consistent with model predictions? (DOI: 10.1002/anie.202114450, DOI: 10.1039/d3ee02196c)

Response 4: Thank you for your valuable suggestion. We recognize the significance of combining theoretical modeling with practical verification. In Section 5 (Case Study Analysis), we specifically state that the parameterization of the carbon trading price is done with reference to historical data from actual international carbon emissions trading systems. Additionally, while we agree with your viewpoint on cross-country policy case studies, this study primarily focuses on exploring emission reduction and pricing strategies under different policy scenarios in green supply chains. In-depth exploration of regional policy differences and their impact will be an area of future research.

Reviewer 3 Report

Comments and Suggestions for Authors

Dear authors,

thank you for your contemporary and very detailed work.

The topic of the work is very novel, the structure is adequate, the methodology is precisely defined, the results are discussed at a high-detailed level.

On the basis of the conducted research, you managed to successfully respond to the research challenges that you formulated at the beginning of the work, which are very relevant in the context of designing the so-called hybrid policies aimed at managing the carbon footprint and consequently reducing carbon emissions.

It is precisely in this part that I see the possibility for a small improvement of the work, which is certainly of high quality in its current form:

1. In the introductory part of the paper, make a clearer and more detailed connection with the SDGs - how are they connected with the carbon tax, are there elements of sustainability in the tax system, which specific SDGs benefit the most from the approach that you proposed in the paper,

2. As you yourself noticed on page 5, the design of carbon taxes can be very sensitive and must be done with an eye on environmental responsibility. This challenge can be the subject of a whole new paper but, as far as your paper is concerned, it is enough to describe in more detail the specifics of carbon taxes design connection with your research.

3. One of the most significant observations in your work (chapter 6.2) is that the government should avoid a one-size-fits-all approach and that emission policies should be more tailored. Excellent! Please, elaborate in one more paragraph adding influential aspects.

4. Check minor technical issues.

Kind regards

Author Response

Comment 1: In the introductory part of the paper, make a clearer and more detailed connection with the SDGs - how are they connected with the carbon tax, are there elements of sustainability in the tax system, which specific SDGs benefit the most from the approach that you proposed in the paper?

Response 1: Thank you for your valuable suggestion. We have added more detailed content in the introduction regarding the connection between carbon taxes and the Sustainable Development Goals (SDGs). Specifically, we discussed how the implementation of carbon taxes can support SDG 13 (Climate Action) by incentivizing emission reductions, and how SDG 7 (Affordable and Clean Energy) and SDG 9 (Industry, Innovation, and Infrastructure) benefit from the transition to cleaner technologies and sustainable industrial practices. We also highlighted how sustainability elements in the tax system can promote a greener economy and contribute to achieving these SDGs.

Comment 2: As you yourself noticed on page 5, the design of carbon taxes can be very sensitive and must be done with an eye on environmental responsibility. This challenge can be the subject of a whole new paper but, as far as your paper is concerned, it is enough to describe in more detail the specifics of carbon taxes design connection with your research.

Response 2: Thank you for your suggestion. In response, we have added a more detailed description of the connection between the design of carbon taxes and our research in the literature review section. We explain the importance of carefully designing carbon taxes to ensure they effectively balance environmental responsibility with economic considerations. This includes discussing factors such as the tax rate, the scope of the tax, and the role of incentives in encouraging firms to adopt green technologies. This additional discussion strengthens the relevance of carbon tax design to our research.

Comment 3: One of the most significant observations in your work (chapter 6.2) is that the government should avoid a one-size-fits-all approach and that emission policies should be more tailored. Excellent! Please, elaborate in one more paragraph adding influential aspects.

Response 3: Thank you for your positive feedback. In response to your suggestion, we have added another paragraph in Section 6.2 to elaborate on the influential aspects of tailoring emission policies. Specifically, we discuss the need for policies that consider factors such as the size of the firm, its technological capacity, sectoral characteristics, and geographical context. Tailored policies allow governments to better align the costs of compliance with the financial capabilities of different firms, promoting more equitable and effective emission reductions across industries.

Comment 4: Check minor technical issues.

Response 4: Thank you for your comment. We have thoroughly reviewed and addressed all minor technical issues. These include checking for consistency in formatting, ensuring proper citation formatting, and making necessary adjustments to improve the clarity of the manuscript.