The implications of the carbon tax on the vehicle remanufacturing industry in the complex competitive environment

Abstract

Under the carbon tax policy, the vehicle remanufacturing has become popular, which threatens the new vehicle market. Facing the complicated competitive environment, the automobile manufacturer always adjusts product modular design to deal with the challenges from the internal and external remanufacturing. Currently, considering the impacts of the complicated market competitions and product modular design on the enterprise's operation management, how the carbon tax policy affects the vehicle remanufacturing is still uncertain. Thus, we construct a duopoly remanufacturing competition model consisting of an automobile manufacturer and remanufacturer with the aim of maximizing profit and determine the optimal product modular design, production, and remanufacturing decisions as well as profits. Then, we explore the impacts of the carbon tax on the vehicle remanufacturing supply chain from the perspectives of the economic, environment, and consumer surplus. The results show that the carbon tax is always disadvantageous to automobile manufacturer's profit but may benefit the automobile remanufacturer's profit. Contrary to the intuition, improving the carbon tax is not always conducive to the environment and harmful to the consumer.

Managing mass customization products with modular design for recycling in a closed‐loop supply chain

“…A returned, modular MC product can be easily disassembled into multiple useful components that would be built into the new MC products, thereby reducing the remanufacturing cost (Chang & Yeh, 2013;Gu & Sosale, 1999). The variable unit remanufacturing cost for used MC products can be formulated as c r ¼ c n À vm (Hu et al, 2021;Wang et al, 2023), which is lower than the unit manufacturing cost of new products c n and decreases in the modularity level m. v denotes the maximum unit cost saving from remanufacturing via modular design, thus 0 < v < c n . As a result, the average production cost for each MC product can be expressed as (Sarkar & Bhala, 2021;Savaskan & Van Wassenhove, 2006).…”

“…The aforementioned studies simply assume that the remanufacturing cost is fixed without exceeding the production cost of new products, and ignore the effect of manufacturer's product design on remanufacturing cost. Wu (2012), Hu et al (2021), and Wang et al (2023) proposed that the remanufacturing cost can be reduced by modular design, but not considered the effect of product modularity on demand. Our contribution to this stream is that MC manufacturers can invest in modular design, which not only reduces the variable remanufacturing cost, but also increase orders.…”

“…Then, the recycling rate of used MC products can be given by , and indicates that the recycling quantity of used products in current period would not exceed the core supply of new products in previous period. A returned, modular MC product can be easily disassembled into multiple useful components that would be built into the new MC products, thereby reducing the remanufacturing cost (Chang & Yeh, 2013; Gu & Sosale, 1999). The variable unit remanufacturing cost for used MC products can be formulated as (Hu et al, 2021; Wang et al, 2023), which is lower than the unit manufacturing cost of new products and decreases in the modularity level . denotes the maximum unit cost saving from remanufacturing via modular design, thus .…”