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Fierce market competition and consumers’ environmental awareness prompt manufacturers to gain competitive advantages through low-carbon production. However, many firms stay away from low carbon because of financial constraints. Considering chain-to-chain competition, this paper constructs three financing strategic models. The impacts of market competition intensity and consumers’ low-carbon preference on equilibrium decisions and corporate profits are analyzed. Then, comparative analysis is conducted to find the optimal financing strategy. Finally, numerical simulation is used for further analysis and robustness tests. It is indicated that under chain-to-chain competition, low-carbon production cannot improve the negative impact of increased competition intensity on corporate profits. Intense competition weakens the manufacturer’s emission reduction efforts. Moreover, the manufacturer does not always benefit more from internal financing though the low-carbon level is high. When the probability of obtaining a bank loan exceeds the threshold, bank financing is superior to internal financing. An increased low-carbon investment cost coefficient will lower the threshold, which is counterintuitive. Since the preference interval for the downstream retailer to provide prepayments is larger than the interval for the low-carbon manufacturer to choose internal financing, both parties have the incentive to negotiate prepayments. Under internal financing, the wholesale price discount does not affect corporate profits.
Xia et al. (Wed,) studied this question.