This study investigates the competitive issues of the newsvendor problem with product substitution under the carbon cap-and-trade system. Building on existing research, this paper introduces the carbon cap-and-trade system under uncertain market demand and considers that the original equipment manufacturer (OEM) can choose to procure raw materials from the contract manufacturer (CM), with both final products being substitutable. Furthermore, we explore the different substitution relationships between OEM and CM products under both pure competitive and co-opetitive modes. For this problem, decision models are developed for various scenarios, and optimal solutions satisfying given conditions are provided. We find that in one-way substitution, under pure competition, an increase in the OEM’s (or CM’s) green investment and substitution rate only leads to an increase in OEM’s (or CM’s) yields, while an increase in the OEM’s (or CM’s) green investment does not necessarily reduce CM’s (or OEM’s) yields. In the co-opetitive mode, an increase in the substitution rate and green investments of both manufacturers may lead to an increase in the yields of both manufacturers. Furthermore, an increase in carbon trading prices does not necessarily inhibit the manufacturer’s yields. Moreover, we find that under the same competition mode, under certain conditions, two-way substitution between OEM and CM can bring better profits to both manufacturers and the entire supply chain. When the two modes are in the same substitution scenario, and the CM cannot substitute for the OEM, the optimal decisions and total supply chain profits of the two modes are equal. Finally, through numerical analysis, we find that neither mode is necessarily optimal when CM can substitute for OEM. Additionally, it is observed that when the same mode is in different substitution scenarios, total supply chain profits may be enhanced in the presence of product substitution.

The global focus on carbon reduction has intensified, prompting numerous high-energy-consuming enterprises to venture into the carbon cap-and-trade system. However, in recent years, the emergence of destabilizing factors has introduced disruptions to supply chains. The study addresses the two-stage ordering problem for a manufacturer under the carbon cap-and-trade system. In the first stage, the manufacturer engages in green investments and places orders with both an unreliable and a reliable supplier. After updating demand forecast information in the second stage, orders are placed with the backup supplier, and carbon allowances are settled at the end of the period. Under these conditions, three supply scenarios of the unreliable supplier are considered: time-varying supply with imperfect demand updates, all-or-nothing supply with imperfect demand updates, and time-varying supply with perfect demand updates. Optimal ordering decisions are provided for each scenario. We find that when demand updates are imperfect, the manufacturer will invariably engage with the unreliable supplier. However, when demand updates are perfect, the manufacturer may choose to forgo the unreliable supplier. Next, we analyze the influence of carbon trading prices on ordering decisions in these scenarios. We find that when the probability of disruption is substantial, dual sourcing must exist in the first stage under the all-or-nothing supply. Finally, we conduct numerical analysis by utilizing parameters, such as carbon trading prices, as referenced in the existing literature. Through numerical analysis, we find that opting for the all-or-nothing supplier becomes economically advantageous for the manufacturer when the backup supplier is profitable. Conversely, when the backup supplier is not profitable, the manufacturer tends to opt for the unreliable supplier with time-varying supply. Moreover, optimal profit for the manufacturer is not achieved when demand updates are perfect.