The Elimination Effect of Take-Back Regulation on Backward Production Capacity Remanufacturing Supply Chains

Abstract

With more and more end-of-life products in daily life, many companies are engaging in remanufacturing, including backward production capacity (BPC) enterprises. Meanwhile, take-back regulation always asks the manufacturer to take back end-of-life products to reduce pollution. However, the effect of take-back regulation on remanufacturers remains unclear. In this paper, we first analyzed the take-back regulation threshold with the elimination effect. We then discussed the impact on stakeholders, such as the manufacturer, the remanufacturer, consumers, and the government. A two-stage dynamic market model is proposed, which considers the market with/without BPC remanufacturer. Take-back regulation’s elimination effect is studied, and the results show that when the collection target reaches the elimination threshold, the manufacturer’s profit declines, the BPC remanufacturer is eliminated, consumer surplus decreases, and social welfare is improved. Besides, to cope with a high take-back regulation target, the manufacturer will reduce new product output, which leads to BPC remanufacturer’s benefits decline. A numerical study is given with a different collecting strategy of the BPC remanufacturer, the incentive interval, the inhibition interval, and the elimination interval of the take-back regulation for stakeholders which are described. At last, some managerial insights are given to help the regulator implement take-back regulation.