Production and pricing decisions in a dual-channel supply chain under remanufacturing subsidy policy and carbon tax policy

Abstract This article studies the optimal production and pricing decisions of two firms in a dual-channel supply chain selling both remanufactured and new products under remanufacturing subsidy policy (RSP) and carbon tax policy (CTP), respectively, and examines which policy is better for the society. The results provide insights for firms to make optimal decisions under RSP and CTP, and for government to select policies. The main results and contributions are summarised as follows. First, production quantity of the remanufactured product increases in subsidy rate of RSP while production quantity of the new product decreases in subsidy rate of RSP. Production quantity of the new product decreases in tax rate of CTP while production quantity of the remanufactured product increases or decreases in tax rate of CTP, depending on the remanufactured product’s emission intensity. Second, RSP can be more effective than CTP in curbing carbon emission. Third, when environmental cost coefficient is relatively low (high), social welfare under RSP is greater (smaller) than that under CTP.

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