Channel selection for retailers in platform economy under cap-and-trade policy considering different power structures

•Channel encroachment in platform economy under cap-and-trade policy is studied.•Cap-and-trade policy affects channel encroachment of retailers in platform economy.•Power structure affects channel encroachment of retailers in platform economy.•Retailers entering platforms may reduce the total carbon emission.•Entering platforms is always beneficial to consumers. With the outbreak of COVID-19 and some environmental problems in recent years, consumers prefer to shop online and purchase green products. Considering the benefit of the e-commerce platform, offline retailers face the challenge of whether to enter e-commerce platforms. Moreover, different power structures may affect retailer encroachment in the platform economy. Thus, we develop theoretical models considering retailer channel selections, different power structures between a retailer and a manufacturer, and cap-and-trade policy. The main results show that the optimal channel selection of the retailer is affected by the annual service fee, the power structure and the carbon trading price. An interesting result is that the retailer entering the platform has a good chance to reduce the total carbon emissions. In the extensions, we consider online reviews, consumers’ channel preferences, the carbon emission of the logistics, and the shipping cost, and find that the robustness of the main results still holds.