Study on the Influence of Government Incentive Measures on Product Recovery Based on System Dynamics Simulation

Abstract

An evolutionary game model between manufacturers is established to study the influence of government incentive measures for the EOL product recovery based on the assumption that all manufacturers have bounded rationality. Analysis on stable state shows that the evolutionary stable state does not always exist in the model. On the basis of this analysis, a system dynamics model is established to analyze the influence of the lowest recovery ratio and the fixed reward on the recovery behaviors of manufacturers by simulation. Simulation results illustrate that there exists a reasonable range of the lowest recovery ratio within which government incentive measures work well and the fixed reward can expand the width of the reasonable range. Any above or below the reasonable range of the lowest recovery ratio will invalidate government incentive measures. Government should enhance the degree of the lowest recovery ratio in the below situation, and provide manufacturers with greater amounts of reward for their product recovery actions in the above situation.