Abstract

The government plays a critical role in the promotion of recycling strategy among supply chain members. The purpose of this study is to investigate the optimal government policies on closed-loop supply chains and how these policies impact the market demand and the returning strategies of manufacturers and retailers. This paper presents a design of closed-loop supply chains under government regulation by considering a novel three-stage game theoretic model. Firstly, Stackelberg models are adopted to describe the one-shot game between the manufacturer and the retailer in a local market. Secondly, based on the Stackelberg equilibriums, a repeated and dynamic population game is developed. Thirdly, the government analyzes the population game to find the optimal tax and subsidy policies in the whole market. To solve the proposed model, the idea of backward induction is adopted. The results suggest that, by collecting tax and allocating subsidy, the government can influence the market demands and return rates. The centralized supply chain structure is always preferred for the government and the market. The government prefers to allocate subsidy to low-pollution, low-profit remanufactured products. The environmental attention of the government affects the subsidy policy.

Highlights

  • In recent years, the importance of environmental protection has been recognized

  • We found that the policy can increase the return rate up to 0.75843 in the centralized model and the rates are slightly increased in model M and model R

  • By conducting the numerical experiments, we find that the higher the tax, the lower the return rate

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Summary

Introduction

The importance of environmental protection has been recognized. Used products may cause various environmental issues. Through remanufacturing, the residual values of used products can bring economic benefits. Used products such as auto and home appliances contain a large amount of recyclable metal, plastics, and other resources. By recycling those products, the resources can be effectively reused to promote the sustainability of a society. New products are more environment-friendly than old products. Compared with ordinary vehicles, electric vehicles use clean energy and are more energy-efficient

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