Abstract In this paper, the effect of carbon emission reduction in the manufacturing process on production demand is emphasized under carbon trading regulation and carbon emissions constraints. A sidepayment selfenforcing contract is designed to resolve the problem that spontaneity of participation in sidepayment contracts design based on supply chain coordination is over emphasized while rationality and fairness of allocation of profit increment is not considered. And the numerical analysis is given. As a result, in Stackelberg game setting, the leader can induce the follower to make bigger cuts in their emissions by increasing its carbon emission reduction; in complete information static state game setting, company can help increase the total carbon emission reduction of the supply chain with a credible signal on improving emission reduction before making a decision; with the new sidepayment selfenforcing contract decentralized decision according to individual rationality incurs a collective reason effect in the centralized setting.
2014, Vol. 11 
