Choice of Government’s Mechanism in Closed-loop Supply Chain by Considering Customer’s Awareness of Environmental Protection Under Asymmetric Information

Abstract

Environmental consciousness has become very important in theory and practice, the recycling and reusing of waste electrical and electronic equipment (WEEE) can effectively improve the efficiency of resource utilization. In the paper, based on the customer’s awareness of environmental protection, we compare the impact of different government mechanisms on reducing the carbon emission and improving the effectiveness of the recovery quantity under asymmetric information. We build three different decision-making models by using the dynamic game theory. We analyze the optimal decision in four decision-making models and explain the feature of different government mechanisms. Lastly, we analyze the impact of the customer’s awareness of environmental protection on the optimal decision making models. The result shows that (1) The government’s carbon emission reward-penalty mechanism can improve the wholesale price for new product and improve the buy-back price for the WEEE in manufacturer. (2) The government’s unit carbon tax for manufacturer is larger than the degree of the carbon emission reward-penalty for manufacturer, the manufacturer’s cost of production can increase. The unit sale price of retailer can improve with the increasing of the manufacturer’s wholesale price for new product. (3) The government’s unit carbon tax for manufacturer is larger than the degree of the carbon emission reward-penalty for manufacturer, the manufacturer’s cost of production can increase.