IMPACTS OF THE HORIZONTAL CROSS-SHAREHOLDING ON SUPPLY CHAIN DECISIONS UNDER THE CARBON CAP POLICY

. This paper investigates the influence of horizontal cross-shareholding on supply chain decision-making under a carbon cap policy by establishing a two-stage supply chain model containing one upstream firm and two downstream firms. Based on the level of competition between two downstream firms, we divide the model into three categories: Bertrand competition, crossshareholding, and full cooperation. The inverse induction method is then used to determine the optimal decisions and the range of effective carbon cap values. Additionally, we compare and analyze the equilibrium outcomes of the supply chain. The results indicate that the total supply chain profits and the profits of two downstream firms both increase with the increase of cross-shareholding, while the opposite is true for the profit of the upstream firm. Within the effective carbon cap, the profit of each member increases with the increase of the carbon cap. To guarantee that the profits of both downstream firms increase due to cross-shareholding, we establish a basic market demand bound between two downstream firms. Numerical simulations are used to validate the important findings.