Consequence analysis for integrating remanufactured products for social donation (RSD) under mandatory take-back regulation

Abstract

To achieve better environmental performance and lessen waste, governments are setting mandatory take-back legislation that requires manufacturers to recycle and remanufacture waste products (i.e., remanufactured products) as much as possible. In this background, enterprises with long-term vision proactively introduce charitable donations into remanufactured products to realize both environmental and social responsibility. However, the impacts of remanufactured products on social donation (RSD) are unclear under the government’s mandatory environmental responsibility goal and worthy of further study. In this paper, we adopt a standardized model where an original equipment manufacturer(OEM) forgoes developing RSD as a benchmark. Some significant ramifications including the economic, environmental, and social consequences after OEM engaging in RSD are examined under mandatory take-back target. It is found that, under the mandatory take-back regulation (i.e., environmental responsibility), the profit of OEM increases, the numbers of new and remanufactured products increase after engaging RSD. About social welfare, the consumer surplus from purchasing new and remanufactured products increases after engaging RSD. On the environmental side, however, the environmental impact under mandatory environmental responsibility becomes worse after performing RSD. A striking result shows that under compulsory take-back regulation, the greater the marginal revenue of remanufactured products for sale, the more willing OEM is to conduct RSD, which stands in stark contrast to conventional wisdom.