Optimal Dynamic Pricing for Fresh Products Under the Cap-and-Trade Scheme

This paper focuses on an emission dependent supply chain consisting of one emission-dependent manufacturer and one emission-permit supplier under the carbon-and-trade scheme, where emission permission becomes requisite for production. We consider the emission cap of fresh products manufacturer allocated by the government and investigate its influence on decision-makings. An optimal control model is also established to maximize the total profit for manufacturer and supplier, where the demand not only depends on the current price, but also is sensitive to the historical price. The dynamic optimal pricing strategy is obtained through solving the optimal control model. In addition, numerical simulations and sensitivity analysis are carried out and some suggestions are proposed to formulate their pricing policies.