Manufacturers’ adoption of industrial symbiosis under carbon taxation: Environmental performance and the role of green technology

A carbon tax incentivizes manufacturers to adopt low-carbon strategies. Industrial symbiosis (IS) is widely advocated to enhance waste reduction and resource efficiency. This study examines the economic feasibility and environmental performance of IS under carbon taxation. We develop a game-theoretic model with an upstream waste-generating manufacturer and a downstream waste-utilizing manufacturer, analyzing three scenarios: traditional manufacturing, IS only, and IS combined with upstream green technology. The analysis derives thresholds showing that IS adoption depends jointly on fixed investment costs, cost-sharing arrangements, and upstream production costs. Importantly, IS does not necessarily reduce carbon emissions, as output expansion induced by cost savings may offset environmental benefits. The adoption of green technology stabilizes waste supply, improves carbon efficiency, and enlarges the parameter region in which IS is both economically viable and environmentally effective. Carbon taxes influence IS adoption differently across upstream production costs: moderate rates encourage adoption among intermediate-cost manufacturers, whereas excessive taxes can discourage participation. Higher taxes reduce emissions but may lower social welfare in certain cost ranges. Overall, IS combined with green technology under well-designed carbon taxes enhances both environmental and economic outcomes.