The impacts of low carbon subsidy, collection mode, and power structure on a closed-loop supply chain

Abstract

The government subsidy, collection mode, and power structure not only bring about a big challenge for the closed-loop supply chain (CLSC) management but also affect both the customer and the environment. This paper considers a CLSC consisting of one manufacturer and one retailer, where the manufacturer sells the new and remanufactured products through the retailer to the customer and he obtains a low carbon subsidy allocated by the government for each unit remanufactured product. Three different collection modes, viz., manufacturer collection, retailer collection, and dual collection, can be chosen from collecting the used products. In addition, three different power structures, i.e., Manufacturer Stackelberg, Vertical Nash, and Retailer Stackelberg, are considered in this paper. Based on the game theory approach, the optimal pricing and recycling policies of the CLSC members are derived under nine different scenarios. Then, we compare the derived results to explore the impacts of the low carbon subsidy, collection mode, and power structure on the CLSC from the perspectives of the customer, the environment, the manufacturer, and the retailer. It is shown that a high low carbon subsidy will lead to heightened market demand, improved environment performance, and increased members' profits. A balanced supply chain power relationship will benefit the customer and the environment, and in contrast, an imbalanced supply chain power relationship will benefit the manufacturer and the retailer. We derive the value range of the competing intensity for which it is beneficial to build dual collection channels based on these above perspectives.