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Sustainability 2017, 9(7), 1235;

Managing Carbon Footprints under the Trade Credit

School of Business, Central South University, Changsha 410083, Hunan, China
The Collaborative Innovation Center for Resource-conserving & Environment-friendly Society and Ecological Civilization, Central South University, Changsha 410083, Hunan, China
Office of the President, Hunan University of Commerce, Changsha 410205, Hunan, China
Author to whom correspondence should be addressed.
Received: 18 April 2017 / Revised: 9 July 2017 / Accepted: 11 July 2017 / Published: 17 July 2017
(This article belongs to the Section Economic, Business and Management Aspects of Sustainability)
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We investigate how the retailer adjusts optimal ordering policy in the presence of cap-and-trade system and trade credit, and the corresponding changes of the retailer’s total costs and carbon footprint. Trade credit is one of the most used short-term financing tools. Our study shows that carbon emissions trading will shorten the ordering cycle for products that emit more carbon dioxide during the storage stage, and therefore reduce the buying behavior stimulation effect of trade credit on these products. Under the cap-and-trade system, the retailer’s total cost may increase or decrease, depending on the combination of carbon cap allocated to the retailer and the carbon price. Moreover, trade credit and the corresponding cost of capital affect the retailer’s carbon emission reduction strategy by changing the retailers’ consolidated cost during the ordering and inventory holding stages. View Full-Text
Keywords: trade credit; cap-and-trade system; inventory model; carbon footprint trade credit; cap-and-trade system; inventory model; carbon footprint

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Chen, X.; Gong, W.; Wang, F. Managing Carbon Footprints under the Trade Credit. Sustainability 2017, 9, 1235.

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