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Supplier Financing for Green Transformation: When Trade Credit Fails and Energy Performance Contracts Succeed under Carbon Regulation

delete2026-04-17
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PRE
AI
R
Ruxia Lyu
Z
Zhitang Li
R
Reza Zanjirani Farahani *
DOI:10.1016/j.ijpe.2026.110044delete
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Abstract

Abstract

En 中文
Amid tightening environmental regulations, many manufacturers face capital barriers when adopting green recycling initiatives. We analyze how suppliers may alleviate these barriers by offering trade credit (TC) or by combining energy performance contracting (EPC) with TC. Using a Stackelberg game under carbon tax regulation, we study a supply chain in which a supplier provides financing to a capital-constrained manufacturer that is considering investment in recycling. The analysis shows that the manufacturer’s recycling decision hinges on both capital availability and component durability. Without financing, even manufacturers with sufficient capital may forgo recycling when efficiency is low; with TC or EPC, by contrast, recycling emerges only for sufficiently durable components, suggesting that financial support alone cannot compensate for poor operational efficiency.
Keywords:
Supplier financing
Trade credit
Energy performance contracting
Green recycling
Carbon regulation

Journal

International Journal of Production Economics cover
International Journal of Production Economics
IF:
10
Papers:
7.9K
Citations:
3.6W

Organization

S
Shenzhen University
Scholars:
4.0K
Papers: 1.7K
Citations: 5.4W
J
Jinan University
Scholars:
2.4K
Papers: 729
Citations: 122
P
paris school of business
Scholars:
20
Papers: 21
Citations: 0
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