Joint emission reduction strategy considering channel inconvenience under different recycling structures

Abstract

The need for carbon emission reduction has worldwide consensus, so many countries have implemented cap-and-trade regulation, and many firms are looking for ways to achieve emission reduction targets. Emission abatement through technological means and recycling has significant academic and practical value since manufacturing with green technology and remanufacturing to recycle products both reduce emissions. Focusing on a closed-loop supply chain with competitive recycling, we establish models for multiple recycling structures considering customers’ perception of inconvenience in recycling channels to identify the optimal emission reduction strategy of manufacturers. The results show that looser regulation stimulates manufacturers to boost the recycling intensity and dominate the collection of used products. In addition, when the carbon quotas are greater than a threshold, manufacturers will improve the investment in green technology while deciding to recycle. As the carbon price and recycling savings grow, manufacturers should increase total investments. However, if the recycling savings are low or manufacturer’s recycling channel is unattractive to consumers, manufacturers should invest even more in recycling than green technology under certain regulation intensities. Our numerical results show that manufacturer-led and recycling competition structures eliminate conflicts among supply chain members. Manufacturer-led and recycling competition structures also maximize both economic and environmental benefits as long as the unit price of carbon is not low. Our study contributes to the growing body of research on low-carbon operations and provides new insights into firms’ decision-making and government policy for emission reduction.