Abstract: In the context of low-carbon economics, considering two conditions of whether carbon tax is imposed or not, a two-stage dynamic game model is discussed in a supply chain consisting of a manufacturer of low carbon product, a manufacturer of normal product and a retailer under carbon tax system. The supply chain reduction and cooperation strategy is analyzed under the condition of integrated manner and decentralized manner. The results show that the carbon tax rate should be set within a reasonable range in decentralized manner, if the carbon tax is set too high, it only increases the operating burden of the company, but does not play a role in reducing carbon emissions. But under integrated manner, the higher the carbon tax is, the more it can promote corporation to reduce carbon emissions. At the same time, we also find that integrated manner can effectively improve the profit of the supply chain, therefore, it is necessary to design a certain constraint mechanism to ensure that the enterprises in the supply chain can make decisions according to integrated manner. At last, a numerical method is used to analyze the impact of related parameters on enterprises’ optimal decision.