The impacts of subsidy strategies and recycling modes on the closed‐loop supply chain

Abstract

This paper explored the effect of government subsidies and recycling modes on a four‐echelon closed‐loop supply chain (CLSC) including a government, a manufacturer, a retailer, and a third‐party recycler. The government directly subsidizes remanufacturing activities, recycling activities, or consumption activities with social welfare maximization objective. Meanwhile, the used products can be recycled by the retail, the third party, or both. We developed nine Stackelberg game models and derived the optimal decision and the equilibrium revenue of all members. Then, the optimal subsidy intensity, retail price, and wholesale price under different scenarios were compared theoretically. Finally, we analyzed the sensitivity of all stakeholders' optimal decisions and revenue to important parameters. Some novel and meaningful conclusions were established: (a) Government directly subsidy for remanufacturing has the same effect as subsidy for recycling; (b) it is better for the government directly subside manufacturing when two recyclers participate under the uncertainty of manufacturing cost or potential market; (c) all members should intervene the recycling cost coefficient, the costs saved of remanufacturing unit used product, and the price elasticity coefficient; (d) it is a conservative and effective strategy for the government to directly subside consumption activities.

Optimal strategies for a multi-channel recycling supply chain in the clothing industry: considering consumer types

“…Furthermore, the results demonstrate the possibility of vicious competition among recyclers. Thus, the government should launch relevant policies, such as subsidies, to ensure the sustainable development of the multichannel recycling market (Song et al, 2022). Stable development of different recyclers guarantees an increase in the total amount of recycled clothing.…”

Manufacturer's online recycling channel intrusion strategies considering digital technology enabling and government subsidies

“…Cao et al (2020) compared the difference of CLSC production decisions under the government's remanufacturing subsidy policy and carbon tax policy and the impact of the two policies on society for the dual channel CLSC and pointed out that the remanufacturing subsidy policy is better suitable for curbing the carbon emissions of enterprises. Song et al (2022) studied the impact of government subsidy and recycling mode on the performance of CLSC and showed that the government directly subsidizes remanufacturing or recycling has the same effect. Hussain et al (2022) studied the government's green technology investment subsidy strategy for manufacturers based on the monopoly market of emission generation companies, helping the government find an optimal green technology investment and subsidy on green technology investment.…”

“…But the above few studies investigated the impact of government subsidy strategies on the selection of CLSC recycling channels from the perspective of exogenous or endogenous government subsidies (Huang & Liang, 2021; Song et al, 2022). However, existing studies have not analyzed the impact of government subsidy strategies on manufacturer's online recycling channel intrusion decisions, nor have they considered the impact of digital technology empowerment on the selection of CLSC recycling modes and government subsidy strategies.…”

“…Government subsidies currently play a significant role in directing businesses to carry out digital transformation and upgrading, green design innovation, recycling and remanufacturing, and other types of government intervention. (Gong, Shi, et al, 2021;Song et al, 2022).…”

“…Song et al (2022) pointed out that regardless of the recycling model, the CLSC's equilibrium status of government direct subsidy retailers and direct subsidy recycling platforms are the same, because the subsidy effect on the key links of CLSC has a substitution, which can be transmitted to each other. However, our research finds that in the context of digital technology empowerment implemented by manufacturer and recycling platform, government subsidies for recycling and remanufacturing activities do not all have a transmitting effect.Combining Proposition 3 and Proposition 4, when the manufacturer does not implement online recycling channel invasion strategies, government subsidies have a transmission effect.…”