Dynamic production and carbon emission reduction adjustment strategies of the brand-new and the remanufactured product under hybrid carbon regulations

Abstract

In recent years, the government and consumers are concerned about environmental issues. Motivated by carbon regulations and consumers’ low-carbon preferences, manufacturers have implemented carbon emission reduction (CER) through green technologies and remanufacturing. Most of the existing literature related to the low-carbon supply chain considered single carbon regulation and assumed that enterprises are completely rational. However, in practice, it is rather difficult for the government to achieve the carbon reduction target only by a single carbon regulation, and manufacturers are bounded rational due to the complexity of the low-carbon market. Consequently, based on bounded rationality, this paper aims to investigate the dynamic production and CER adjustment strategies of the brand-new and the remanufactured product under hybrid carbon regulations, i.e. the carbon tax regulation and the cap-and-trade regulation. Furthermore, the impacts of adjustment parameters and important parameters on decision variables, expected profits, and total carbon emissions are explored. The results showed that adjustment speeds of production and CER have significant impacts on the system stability. For both manufacturers, excessive production and CER adjustment strategies not only reduce their own expected profits but also cause more harm to the environment. In addition, the increase of the carbon tax, the carbon trading price, and consumers’ low-carbon preferences all shrink the stable regions of adjustment parameters, but the increase of these parameters can promote CER behaviors and reduce total carbon emissions. Finally, the feedback control method was used to control the chaos of the supply chain system.