Impact of government fund policy and blockchain technology on closed-loop supply chains in textile and apparel industry

Abstract

Textile waste presents significant environmental risks for the textile and apparel (T&A) industry; however, most textiles can be recycled, enabling the remanufacturing of energy and fiber for resale in the secondary market. In this regard, the importance of a Government Fund Policy (GFP) has been emphasized to promote recycling and remanufacturing efforts aimed at establishing T&A closed-loop supply chains (CLSCs). Simultaneously, blockchain technology and green-product design have transformed T&A brand marketing dynamics due to their crucial roles in enhancing brand trust and increasing market demand. Nevertheless, there is limited research dedicated to examine the interactive effects of GFP and blockchain technology within T&A supply chains. This paper proposes a stylized CLSC game involving a T&A manufacturer and a retailer. The manufacturer sells new and remanufactured T&A products to the retailer while determining green-product design efforts (i.e., green degree). The retailer determines selling prices but incurs usage costs associated with adopting blockchain technology. Through equilibrium analyses, we find that the simultaneous implementation of GFP and blockchain technology can incentivize T&A manufacturers to enhance the green degree of their products, thereby improving brand trust and market demand. All supply chain agents can benefit from adopting blockchain technology as long as its usage cost is below a threshold level, regardless of whether GFP is implemented or not. Similarly, irrespective of whether blockchain technology is adopted or not, if the ratio between remanufacturing subsidies and environmental taxes exceeds a specific threshold value, GFP will serve as an incentive for sustainability efforts among T&A firms while providing them with greater advantages. Additionally, the simultaneous implementation of GFP and blockchain technology holds significant potential for mitigating environmental pollution, i.e., by carefully selecting appropriate degrees of GFP and blockchain technology parameters, a mutually beneficial outcome can be achieved for T&A firms, consumers, and the environment. These findings have important implications for T&A supply chain managers seeking to optimize CLSCs while integrating blockchain technology. Furthermore, they provide valuable insights into government strategies for implementing GFPs.