Store brands introduction strategy under carbon tax regulation

Purpose: The introduction of store brands has become a crucial strategy that allows the retail industry to gain market share. However, this strategy may lead to increased carbon emissions due to excessive manufacturing, which poses significant challenges to an already deteriorating ecological environment. Various governments have actively implemented carbon emission policies to regulate the production activities of firms. In this context, this study examines firms' store brand strategies under government-imposed carbon tax regulations and investigates how governments can set a reasonable carbon tax to enhance social welfare. Design/methodology/approach: This paper studies a management system composed of one government, one manufacturer, one retailer, and a unit of consumers. A game-theoretical model is used to study the relevant decisions of decision makers. Findings Our study finds that carbon taxes have a significant impact on product prices, carbon emissions, and firms' store brand strategies. Retailers are likely to introduce store brands only when the carbon tax is relatively low, and outsourcing store brands from manufacturer can only be preferred only when the fixed selling cost is low while the fixed production cost is high. Furthermore, introducing store brands can enhance social welfare when the environmental damage coefficient is relatively low, necessitating the timely implementation of carbon tax policies by governments to regulate firm behavior. \textbf{Originality/value} This study contributes to the literature on the introduction of store brands and participation in carbon tax regulation. We reveal strategic insights into the introduction of store brands under carbon tax regulation, which can assist policymakers and marketing practitioners.