Two Products Manufacturer’s Production Decisions with Carbon Constraint.docVIP

Two Products Manufacturer’s Production Decisions with Carbon Constraint 　　Abstract In this paper， we consider a manufacture which produces both ordinary products and green products in a monopoly market， and investigate his production decisions with carbon constraint. Firstly， we derive the manufacturers optimal production and maximum profit without carbon constraint. Then， we discuss the optimal production and maximum profit with carbon constraint in different situation. The results indicate that manufacturers optimal production and maximum profit with carbon constraint are less than them without carbon constraint， optimal production is an increasing function with carbon constraint. Key words： Production decision； Carbon constraint； Complete monopoly INTRODUCTION Governments of different nations have paid high attention to the severe situation of global warming. The international convention Kyoto protocol which has come into force since 2005 sets a system called Cap and Trade which is designed to set emissions targets for each country or region to reduce global greenhouse gas emission effectively. Due to this target， all countries and regions have to distribute the whole carbon emission target to the micro enterprise level， as a result， manufacturers whose production are dependent on carbon ought to face the severe carbon constraint. To overcome the carbon constraint， manufacturers can reduce production， control pollution emission or produce green product. Among these means， more and more manufacturers have chosen to produce green product. Comparing with the traditional ordinary product， green product is totally different in production cost， carbon emissions of unit product， market demand and price， etc， such as LED lamp and ordinary lamp. Green product has higher production cost and lower carbon emissions of unit product than ordinary product， so it can be used as an important mean of saving carbon emissions. Although more and more manufactures h