Does implementing trade-in and green technology together benefit the environment?

Abstract

In modern manufacturing operations, green technologies are becoming increasingly popular. Meanwhile, trade-in programs are widely implemented to boost sales and enhance product recycling, which would benefit the environment. It is widely observed that many companies implement the green technology (GT) and trade-in program together. However, whether this act is always beneficial to the environment is unclear. We hence build analytical models to address this issue. To conduct a comprehensive study, we follow the real-world practices and examine both the retailer collects (R-collect) and manufacturer collects (M-collect) scenarios in a supply chain. Our results show that the “R-collect scheme with GT” leads to the highest levels of supply chain profit and social welfare but more emissions may be generated. Besides, implementing GT does not always benefit the environment in both R-collect and M-collect schemes. Considering from the environment perspective, we interestingly show that governments should advocate the “M-collect with GT” and “R-collect without GT” schemes. Correspondingly, to motivate both the supply chain and consumers to accept the advocated strategies, we characterize the carbon tax and subsidy based “carrot-and-stick” policy. We further show in the extended analyses that our main results hold under competition, when the emission abatement cost takes different analytical forms, and when consumers are environmentally conscious.