Government subsidies in manufacturing and remanufacturing with consumer segment and heterogeneous demand

Document Type : Article


1 - College of Transport and Communications, Shanghai Maritime University, Shanghai 201306, China. - Antai College of Economics and Management, Shanghai Jiaotong University, Shanghai, China

2 School of Economics and Management, Shanghai Maritime University, Shanghai 201306, China

3 College of Transport and Communications, Shanghai Maritime University, Shanghai 201306, China


Waste products have double properties of environmental hazard and resource recovery, while recycling behavior has greater positive external effect of economic, which often results in the low enthusiasm for enterprises to engage in remanufactured activity. For price decisions on whether government subsidizes closed-loop supply chain or not, Stackelberg game model were constructed under three scenarios: none is subsidized (Model N), subsidize to manufacturer (Model M) and subsidized to recycler (Model R) to obtain the optimal government subsidy and price decision, as well as analyze the difference among the equilibriums of four scenarios. From the conclusion, we can find that the government subsidy improve the social welfare, as well as the government implement different subsidy policies based on the needs for economic and social progress.


References  1. Xu, L.,Wang, C.X., and Zhao, J.J. Decision and coordination  in the dual-channel supply chain considering  cap-and-trade regulation", J. Clean. Prod., 197, pp.  551{561 (2018a).  2. Xu, L. and Wang, C.X. Sustainable manufacturing  in a closed-loop supply chain considering emission  reduction and remanufacturing", Resour. Conserv.  Recyc., 131, pp. 297{304 (2018b).  3. Nazari, L., Seifbarghy, M., and Setak, M. Modeling  and analyzing pricing and inventory problem in a  closed-loop supply chain with return policy and multiple  manufacturers and multiple sales channels using  game theory", Sci. Iran., 25(5), pp. 2759{2774 (2018).  4. Heydari, J., Govindan, K., and Jafari, A. Reverse and  closed loop supply chain coordination by considering  government role", Transport. Res. D- TR. E., 52, pp.  379{398 (2017).  5. Wang, K., Zhao, Y., Cheng, Y., et al. Cooperation  or competition? Channel choice for a remanufacturing  fashion supply chain with government subsidy", Sustainability.,  6, pp. 7292{7310 (2014).  6. Cucchiella, F. and Adamo, I. Technical and economic  analysis of biomethane: a focus on the role of subsidies",  Energ. Convers. Manag., 119, pp. 338{351  (2016).  7. Cui, L., Wu, K.J., and Tseng, M.L. Selecting a  remanufacturing quality strategy based on consumer  preference", J. Clean. Prod., 161, pp. 1308{1316  (2017).  8. Chen, J.X., Liang, L., Yao, D.Q., et al. Price and  quality decisions in dual-channel supply chain", Eur.  J. Oper. Res., 259, pp. 935{948 (2017).  9. Feng, L.P., Govindan, K., and Li, C.F. Strategic  planning: design and coordination for dual-recycling  channel reverse supply chain considering consumer  behavior", Eur. J. Oper. Res., 260, pp. 601{612  (2017).  10. Ji, J.N., Zhang, Z.Y., Yang, L., et al. Comparisons  of initial carbon allowance allocation rules in an O2O  retail supply chain with the cap-and-trade regulation",  Int. J. Prod. Econ., 187, pp. 68{84 (2017).  11. Li, B., Zhu, M.Y., Jiang, Z.S., et al. Pricing policies  of a competitive dual-channel green supply chain", J.  Clean. Prod., 112, pp. 2029{2042 (2016).  12. He, R.Y., Xiong, Y., and Lin, Z.B. Carbon emissions  in a dual channel closed loop supply chain: the impact  of consumer free riding behavior", J. Clean. Prod.,  134, pp. 384{394 (2016).  13. Li, X. and Li Y.J. Chain-to-chain competition on  product sustainability", J. Clean. Prod., 112, pp.  2058{2065 (2016).  14. Ferrer, G. and Swaminathan, J. Managing new and  remanufactured products", Manag. Sci., 52, pp. 15{26  (2006).  15. Debo, L., Totkay, B., and Wassenhove, V. Market  segmentation and product technology section for remanufacturable  products", Manag. Sci., 51, pp. 1193{  1205 (2005).  16. Atasu, A., Sarvary, M., and Van, L. Remanufacturing  as a marketing strategy", Manag. Sci., 54, pp. 1731{  1746 (2008).  17. Shu, T., Peng, Z., Chen, S., et al. Government  subsidy for remanufacturing or carbon tax rebate:  which is better for _rms and a low-carbon economy",  Sustainability, 9(1), pp. 1{22 (2017).  18. Atefeh, H., Jafar, B., and Mahdi, B. A robust bi-level  programming model to design a closed loop supply  chain considering government collection's policy", Sci.  Iran., 26(6), pp. 3747{3764 (2019).  DOI: 10.24200/SCI.2018.20609  19. Nazari, L., Seifbarghy, M., and Setak, M. Modeling  and analyzing pricing and inventory problem in a  closed-loop supply chain with return policy and multiple  manufacturers and multiple sales channels using  game theory", Sci. Iran., 25, pp. 2759{2774 (2018).  20. Savaskan, R., Bhattaharya, S., and Wassenhove, L.  Closed-loop supply chain models with product remanufacturing",  Manag. Sci., 50, pp. 239{252 (2004).  21. Mitra, S. and Webster, S. Competition in manufacturing  and the e_ects of government subsidies", Int. J.  Prod. Econ., 111(2), pp. 287{298 (2008).  22. Xiong, Y., Zhou, Y., Li, G., et al. Don't forget your  supplier when remanufacturing", Eur. J. Oper. Res.,  230(1), pp. 15{25 (2013).  23. Atasu, A., Wassenhove, V., and Sarvary, M. E_cient  take back legislation", Prod. Operat. Manage., 18(3),  pp. 243{258 (2009).  24. Hafezalkotob, A. Competition of two green and regular  supply chains under environmental protection and  revenue seeking policies of government", Comput. Ind.  Eng., 82, pp. 103{114 (2015).  25. Shao, L., Yang, J., and Zhang, M. Subsidy scheme  or price discount scheme? Mass adoption of electric  vehicle under di_erent market structures", Eur. J.  Oper. Res., 262(3), pp. 1181{1195 (2017).  26. Ma, W., Zhao, Z., and Ke, H. Dual-channel closedloop  supply chain with government consumptionsubsidy",  Eur. J. Oper. Res., 226, pp. 221{227 (2013).  27. Liu, H., Lei, M., and Deng, H. A dual channel,  L. Xu et al./Scientia Iranica, Transactions E: Industrial Engineering 28 (2021) 1817{1829 1829  quality-based price competition model for the WEEE  recycling market with government subsidy", Omega.,  59, pp. 290{302 (2016).  28. Hong, I. and Ke, J. Determining advanced recycling  fees and subsidies in E-scrap" reverse supply chain",  J. Environ. Manage., 92, pp. 1495{1502 (2011).  29. Wang, Y., Chang, X., Chen, Z., et al. Impact  of subsidy policies on recycling and remanufacturing  using system dynamics methodology: a case of auto  parts in China", J. Clean. Prod., 74, pp. 161{171  (2014).  30. Majumder, P. and Groenevelt, H. Competition in  remanufacturing", Prod. Operat. Manage., 10(2), pp.  125{141 (2001).  31. Webster, S. and Mitra, S. Competitive strategy in  remanufacturing and the impact of take-back laws", J.  Oper. Manage., 25, pp. 1123{1140 (2007).  32. Dmity, K., Timur, N., and Anton, O. Environmental  taxes and the choice of green technology", Prod.  Operat. Manage., 22, pp. 1035{1055 (2013).  33. Miao, Z., Mao, H., Fu, K., et al. Remanufacturing  with trade-ins under carbon regulations", Comput.  Oper. Res., 89, pp. 253{268 (2018).  34. Aksen, D., Aras, N., and Karaarslan, A. Design and  analysis of government subsidized collection systems  for incentive-dependent returns", Int. J. Prod. Econ.,  119, pp. 308{327 (2009).  35. Jia, S., Yan, G., and Shen, A. Dynamic simulation  analysis of a construction and demolition waste  management model under penalty and subsidy mechanisms",  J. Clean. Prod., 147, pp. 531{545 (2017).  36. Ray, S., Boyaci, T., and Aras, N. Optimal prices  and trade-in rebates for durable, remanufacturable  products", Manuf. Serv. Operat. Manage., 7(3), pp.  208{228 (2005).