The optimal power structure of environmental protection responsibilities transfer in remanufacturing supply chain

Abstract

Due to the double-pressure from the constraint of relevant laws and high cost of environmental protection activities, original equipment manufacturers (OEMs) have to seek for some ways to transfer their own environmental protection responsibilities to other members in reverse supply chain, and other members do as well. To grope the optimal environmental protection responsibilities shift patterns between OEMs and other members, we study a remanufacturing supply chain consisting of an OEM and a retailer by transferring their own environmental protection responsibilities to each other in this paper. The OEM (retailer) competitively determines its effort by transferring his (her) remanufacturing (recycling) responsibilities to the retailer (OEM) by the wholesale price (the transfer price) of the remanufactured products (the old products). We develop six game models under different market leaderships and the deciders of environmental protection responsibility transfer factor to address the optimal power structure. By analyzing the equilibrium solutions of the six models, we prove that environmental and economic performance will decrease when consumer initial environmental awareness is in a certain interval and the retailer who is responsible for recycling decides the responsibilities transfer factor. Further, we find that if the OEM leads the game, the dual performances are inferior to the one that the retailer does. The change of the responsibility transfer factor has no effect on the dual performances when the two parties act simultaneously. We also find it is interesting that the OEM undertaken the fixed costs alone has higher profit under some conditions. Based on the comprehensive performance evaluation order of the six models, we propose coping strategies of the OEM, the retailer and the government under consideration of the profits and environmental protection goal.