Effect of raw material substitution on the facility location decision under a carbon tax policy

Félicitations à Youcef Mechouar qui a publié son article intitulé “Effect of raw material substitution on the facility location decision under a carbon tax policy” (avec Vincent Hovelaque et Carl Gaigné), dans la revue “Euro Journal on transportation and logistics”(revue classée Q1 dans Scimago, équivalent Rang A HECRES).

Abstract:
Current environmental issues that have been made unavoidable by environmental regulations have become new constraints for industrial companies. In this paper, we consider a joint production-location problem for supply chains under a carbon tax policy on transport-related carbon emissions. We characterize the relationship that links the production level to the input quantities by considering a production function, namely, constant elasticity of substitution (CES) function. Our study focuses on the potential impact of increased transportation costs due to carbon taxation on the joint production-location decision. We find that the location-production configuration differs according to the degree of substitutability among the raw material quantities. More importantly, we observe that a higher carbon tax is more likely to cause a significant jump in firm location choice and a considerable change in production decisions when a firm has high flexibility in its ability to substitute among input quantities.

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