Decision-making in closed-loop supply chains: The interplay of dual government subsidies, channel Co-opetition, and brand premiums

Abstract

Many governments in different countries and regions incentivize enterprises to recycle and remanufacture through subsidies to improve resource recovery efficiency. This article establishes a supply chain consisting of retailer R, manufacturer M, and third-party supplier N based on government regulations. Firstly, This paper discussed whether retailer R should establish its brand. Secondly, whether manufacturer M chooses internal recycling and whether to cooperate with competitive or non-competitive suppliers was discussed. Finally, the issue of incentive consistency was discussed from the government's perspective. This paper has established four typical scenarios: basic Scenario, cooperative competition, complete competition scenario, and tripartite Scenario. Our research results indicate that Recycling subsidies and remanufacturing subsidies have a promoting effect on retailer R's establishment of independent brands and manufacturer M's participation in internal recycling, with recycling subsidies having a more significant promoting effect on manufacturer M's participation in internal recycling. The government should control the recycling subsidy not to be too high to ensure that both manufacturer M and retailer R prefer the CO scenario and enhance the stability of the supply chain. At the same time, remanufacturing subsidies should be appropriately increased to increase social welfare.