Abstract
The government as a policy maker wishing to promote remanufacturing and proper disposal of hazardous old products which are harmful to environment has taken many actions, ranging from carbon regulation and financial incentives such as trade-in subsidy. However, carbon tax can result in loss of profit for firms to some degree, so the government has to give other subsidy to balance the profits and carbon emission. Thus, this article investigates two subsidy mechanisms: remanufacturing subsidy or tax rebate. The optimal pricing and production decision under these policies are examined. Our results show that carbon tax has a great impact on pricing strategies. Trade-in subsidy can encourage customers to replace their existing products with new and remanufactured products. Both remanufacture subsidy and tax rebate are beneficial to manufacturer and can further promote remanufacturing development.
Highlights
With the increasing concern of resources and environmental problems, energy conservation and carbon emission reduction have become a heated topic in the current social community
This article notes that the aim of collecting carbon tax from enterprises is to ensure low-carbon production and stimulate manufacturers to make more remanufactured products with carbon tax to reduce the cost of carbon emissions
To develop a better understanding of exploring which policy is better for firms and low-carbon economy we address the following questions: (1) When the government introduces the carbon tax and the trade-in program, what is the optimal pricing and production strategy and in different government policies?
Summary
With the increasing concern of resources and environmental problems, energy conservation and carbon emission reduction have become a heated topic in the current social community. The government is taking measures such as carbon tax and constraint of carbon emission and so on to change the mode of production and operations for enterprises to mitigate carbon emissions. A number of scholars have proposed a policy for the design of carbon tax system to minimize the negative impact Against this backdrop, this article notes that the aim of collecting carbon tax from enterprises is to ensure low-carbon production and stimulate manufacturers to make more remanufactured products with carbon tax to reduce the cost of carbon emissions. To reduce the negative impact of carbon tax and balance firms’ profit and carbon emission cost, the government has two neutral tax policies which transfer carbon tax from enterprises to low-carbon high-tech emerging industries (remanufacturing): government subsidy for remanufacturing and carbon tax rebate.
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