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Emission permit banking, pollution abatement and production–inventory control of the firm

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  • Li, Shoude

Abstract

In this paper, we present a dynamic model modified with emission permit banking and pollution abatement, and investigate the effect of emission permit banking and pollution abatement on the production–inventory strategy of the firm. After introducing emission permit banking and pollution abatement, the cost function consists of the inventory holding and production costs, the cost of investment in abatement capital goods and the emission procurement/selling cost. Furthermore, the inventory holding costs are linear, production costs are non-decreasing and convex functions of the production level, and the costs of investment in abatement capital goods are increasing and convex functions of the investment level. We compare the optimal production–inventory strategy before emission permit banking and pollution abatement and thereafter. The mathematical investigation is based on the Arrow–Karlin model.

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  • Li, Shoude, 2013. "Emission permit banking, pollution abatement and production–inventory control of the firm," International Journal of Production Economics, Elsevier, vol. 146(2), pages 679-685.
    • Handle: RePEc:eee:proeco:v:146:y:2013:i:2:p:679-685
    DOI: 10.1016/j.ijpe.2013.08.023
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    2. Shuai Jin & Yifei Niu & Liuwei Zhao, 2022. "Optimal purchase planning of initial emission permits with the paid use and trading system based on mean–variance model," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 43(6), pages 2409-2420, September.
    3. Bowon Kim & Jeong Eun Sim, 2016. "Supply Chain Coordination and Consumer Awareness for Pollution Reduction," Sustainability, MDPI, vol. 8(4), pages 1-20, April.
    4. Ouardighi, Fouad El & Sim, Jeong Eun & Kim, Bowon, 2016. "Pollution accumulation and abatement policy in a supply chain," European Journal of Operational Research, Elsevier, vol. 248(3), pages 982-996.
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    6. Bowon Kim & Jeong Eun Sim & Caroline Elliott, 2015. "Impacts of government and market on firm’s efforts to reduce pollution," Cogent Economics & Finance, Taylor & Francis Journals, vol. 3(1), pages 1062634-106, December.

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