Comparatively Analyzing the Impact of Government Subsidy and Carbon Tax Policy on Authorized Remanufacturing

Abstract

Authorized remanufacturing is an important means to achieve green manufacturing and carbon neutrality. In this study, a game theory model between a manufacturer and a remanufacturer was constructed to analyze the impact of government subsidies and carbon tax policies on authorized remanufacturing. Based on the game theory model, the effects of two government policies on the optimal solution, namely, the unit cost of remanufacturing product authorization and the waste product recovery rate, were compared and analyzed. This analysis could provide a reference for the government to improve and formulate relevant remanufacturing policies. The main results are as follows: government subsidy policies may increase the unit cost of remanufacturing product authorization and the rates of waste product recovery; government carbon tax policies may not affect the unit cost of remanufacturing product authorization, and increase the rates of waste product recovery; the government subsidy policy may not affect the unit retail price of new products, and reduces the unit retail price of remanufactured products; the government subsidy and carbon tax policies may reduce sales of new products and increase sales of remanufactured products; the government subsidies may increase the revenue of the original equipment manufacturer (OEM) and the remanufacturer; and the government carbon tax policies may increase the revenue of the remanufacturer. However, government carbon tax policies increase the revenue of the OEM only when the new product carbon tax amount is higher than a certain threshold. The impact of the two policies on the environment is related to the ratio of the two products’ impact on the environment, i.e., the quota ratio between the unit government carbon tax of the new product and the unit government subsidy of the remanufactured product. Finally, the consumer surplus is maximized when the government adopts the subsidy policy and lowest when the government adopts the carbon tax policy.

The Impact of Carbon Trade on Outsourcing Remanufacturing

“…Since carbon trade costs are directly amortized over new products, to maintain the sales volume of new and remanufactured products, OEMs need to adjust outsourcing fees based on the increasing level of carbon trade costs, and then weigh the benefits of the two products. It can be seen that the mechanism is very similar to the impact of the carbon tax on unit retail prices [54].…”

“…Similar to [54], the unit retail price of new products is theoretically not affected by consumer preference. As the public favors remanufactured products, however, the OEMs will see decreased sales of new products and potential profit loss under the carbon trade policy.…”

“…Specific policies include production support policies such as government subsidies [29][30][31][32][33][34][35][36][37][38], return policies [39][40][41], and carbon emissions intervention policies such as carbon trade [3,4], carbon taxes [42][43][44][45][46] and carbon regulation [47]. Scholars have compared the impacts of different policies [48], including carbon tax and carbon trade [4,49], carbon taxes and government subsidies [50][51][52][53][54], carbon tax and take-back legislation [55], take-back and carbon emission capacity regulations [47], and government subsidies and carbon regulation [22]. Carbon trade mainly affects the supply and demand of high-carbon new products and low-carbon remanufactured product through the administrative means of carbon emission reduction allowances.…”

Extended Warranty Strategy and Its Environment Impact of Remanufactured Supply Chain

“…Tan et al [38] studied the impact of the manufacturer's two remanufacturing models on the supply chain, and the results showed that, for a market with obvious green consumerism, self-remanufacturing is more beneficial. Li et al [39] constructed a game theory model between a manufacturer and a remanufacturer under government subsidies and carbon tax policies. Luo et al [40] developed four game theory models to evaluate the impact of the carbon tax policy on manufacturing and remanufacturing decisions in a closed-loop supply chain.…”

The Impact of CSR on the Performance of a Dual-Channel Closed-Loop Supply Chain under Two Carbon Regulatory Policies

“…Taking the Bohai Bay region of China as an example, the impact of the carbon tax rate and tax cycle share on the economy and carbon emissions has been discussed by Sun et al [10]. Based on the game theory model, the influence of the government subsidy policy and carbon tax policy on the optimal solution of the remanufacturing model was compared by Li et al [11].…”