Abstract：Given carbon trading policy, a two-level supply chain consists of two suppliers and two manufactures. Each firm in the supply chain can choose one organization of carbon emission reduction R&D, including R&D competition, horizontal R&D cooperation, vertical R&D cooperation and general R&D cooperation. Taking into account dynamic change of carbon emission, four differential game models are constructed respectively. From the view of stock of carbon emission, supplier’s profit, manufacture’s profit and supply chain’s total profit, the optimal choice of carbon emission reduction R&D for each firm is analyzed. It is shown that general R&D cooperation is the optimal choice for the supplier; R&D competition is the optimal choice for the manufacture, but both horizontal R&D cooperation and vertical R&D cooperation can only be the second best choice for each firm.
