Dynamic Financing and Subsidy Allowances in Low-Carbon Supply Chains Under Consumption Preference Updating

Growing awareness of low-carbon environmental protection necessitates incorporating the dynamic evolution of consumer preferences into supply chain management. Unlike prior research focusing on single financing or static preferences, this paper uniquely integrates financing choice under mixed-financing conditions and government incentives under dynamic information updating. We investigate a low-carbon supply chain where a capital-constrained retailer combines low-carbon credit financing (LCF) and trade credit financing (TCF) and under the updating of consumption preferences during the lead time, and build a carbon reduction optimization model. The manufacturer’s abatement and production, the retailer’s financing balancing LCF and TCF under bankruptcy risk, and ordering are modeled within a two-period newsvendor framework with demand information updating. Result analysis reveals the following: (i) Under preference updating and equal subsidy amounts, LCF consistently induces higher carbon reduction efficiency than promotion allowances. (ii) Counterintuitively, promotion allowances dynamically enhance the supply chain’s total profit more effectively than LCF, exposing a critical divergence between environmental efficiency and economic performance. (iii) Across all incentive schemes (single or combined), the marginal gain in carbon reduction efficiency declines with increasing subsidy intensity. These findings imply that policymakers should flexibly align the choice of incentive instrument with the prioritized objective—carbon reduction or supply chain profitability—given the diminishing marginal returns.