Abstract
The US Environmental Protection Agency (EPA) has taken major steps to meet the targets of the Social Cost of Carbon (SC-CO2). In what follows, a research model using the market price for emission allowances per metric ton illustrates how the economic and environment mechanisms of carbon price can be formulated using deterministic and stochastic equilibrium models: the primary concern becomes one of optimal stochastic control. Moreover, this framework allows us to consider the prospective influence of the proposed policy on the profit margins for remanufactured goods, in addition to its performance; further presented is an in-depth study to quantitatively evaluate the model and its performance through the use of Orthogonal Arrays. The results demonstrate that the proposed policy for carbon tax brings about tight constraints on the quantity of carbon emissions produced through supply chain operations; numerical examples are based upon actual locations in the area of Boston.