Recycling model of low‐carbon and closed‐loop supply chain considering government subsidies

Abstract

AbstractTo find the manufacturer's optimal recycling mode under the dual factors of government subsidies and consumers' low‐carbon preference, we construct three game models by taking the wholesale price, retail price, recovery rate, and carbon emission reduction level as the decision variables. Then, Stackelberg Game and Mathematica 12.0 are used to work out the equilibrium strategies of the recovery model, then we reveal the impact of government subsidies and consumers' low‐carbon preference on the closed‐loop supply chain. (1) Entrusting retailers to recycle is the best choice. (2) The government subsidy to the manufacturer and retailer within a certain range is conducive to promoting recycling activities and has a positive impact on the manufacturer's cost savings and carbon emission reduction investment. Nevertheless, the effect of subsidizing the third party is not obvious. (3) Cultivating consumers' low‐carbon preference for low‐carbon/remanufactured products can not only directly promote the overall profit of the closed‐loop supply chain, but also increase the rate of recovery and level of carbon emission reduction. Thus, the government should increase the subsidized prices of manufacturers and retailers and there is no need to subsidize third parties. It is necessary to cultivate consumers' low‐carbon preference, which is conducive to promoting manufacturers' carbon emission reduction activities.