Abstract
The government organizations grant incentives to promote green product consumption, improve green product quality, boost remanufacturing activities, etc. through various policies. The objective of this study is to highlight pros and cons of two incentive policies, namely (1) incentive on manufacturer’s R&D investment and (2) direct incentive to consumer based on greening level of the product on the optimal pricing and investment decisions in improving used product return and greening level decisions in a closed-loop supply chain (CLSC). Optimal decisions are derived under manufacturer and retailer-Stackelberg games, and results are compared to explore characteristics of optimal decisions, consumer surplus, and environmental improvement under two marketing strategies of a manufacturer. It is found that the greening level and used product return rate in a CLSC are always higher under retailer-Stackelberg game. If the manufacturer sets a target for greening level, the CLSC members may receive higher profits if consumer receives incentive because of higher consumer surplus. However, environmental improvement may be lower. If the manufacturer sets a product return goal, then CLSC members may compromise with consumer surplus or environmental improvement for receiving higher profits. In the presence of direct incentive to consumers, CLSC members can trade with product at lower greening level for higher profits. Moreover, investment in improving used product return is always less compared to the investment in improving greening level.
Highlights
It is found that the greening level and used product return rate in a closed-loop supply chain (CLSC) are always higher under retailer-Stackelberg game
The graphical representations of total amount of government incentives are presented in Fig. 5a and b
One can observe that the marketing or operational goal of the manufacturer directly affects the total amount of incentive, and the amount is maximum if the manufacturer sets a target on greening level (GL)
Summary
Government regulations, and economical benefits of product remanufacturing/recycling, closed-loop supply chain (CLSC) management emerges as one of the leading research interests from marketing and supply chain management researchers Hewlett-Packard launched recycling initiatives to collect hardware in collaboration with Best Buy stores and recycled 3200 tonnes plastic resin to develop product such as HP ENVY Photo 6200, 7100, and 7800 printers.2 Apple designed their global supply chain facilities by clean energy and archived the goal ‘‘100% renewable is 100% doable.’’3 Government organizations encourage remanufacturing activities by providing incentives under various policies. Researchers made continuous efforts to explore optimal pricing and investment decision in improving greening level and encouraging used product return for remanufacturing in different scenarios (Govindan et al 2015). Based on our knowledge, no analytical study in CLSC setting was made to investigate characteristics of optimal decisions under joint influence of marketing or operational strategies of manufacturer in the presence of government incentive policies. CLSC members may prefer incentive Policy C, which can lead to inferior outcomes in perspective of GL and EI
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