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Open AccessOpen Access JUSTC Management 18 April 2023

A hybrid trade-old-for-new and trade-old-for-remanufactured supply chain with carbon tax

  • School of Management, University of Science and Technology of China, Hefei 230026, China

Cite this:
https://doi.org/10.52396/JUSTC-2022-0148
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  • Author Bio:

    Yu Dong is an Associate Professor at the University of Science and Technology of China (USTC) and a Vice President of Anhui University of Science & Technology. He received his Ph.D. degree in Management from USTC. His research mainly focuses on decision science and operations management

    Wuqing Liao is currently a master student at the School of Management, University of Science and Technology of China. Her research mainly focuses on remanufacture and carbon tax

  • Corresponding author: E-mail: lwq657@mail.ustc.edu.cn
  • Received Date: 14 October 2022
  • Accepted Date: 22 December 2022
    • Available Online: 18 April 2023
    Abstract

  • Abstract

    Facing serious environmental problems, governments and manufacturers are taking action to reduce carbon emissions. Among these endeavors, carbon tax policy are widely adopted by governments, trade-old-for-new (TON) and trade-old-for- remanufactured (TOR) are offered by manufacturers and subsidized by governments. To explore the effects of remanufacturer competition and carbon tax on the manufacturer’s TON and TOR decisions and the environment, we formulate three profit maximization models and present some theoretical and numerical analyses. The results show that, under the remanufacturer competition and carbon tax, the manufacturer’s optimal price and production decisions mainly depend on consumer willingness and carbon tax rate. A higher consumer willingness to manufacturer’s remanufactured products will decrease the demand for the manufacturer’s TON, but it always increases the demand foe the manufacturer’s TOR. A higher consumer willingness to remanufacturer’s products will not affect the demand for the manufacturer’s TON; however, it will reduce the demand for manufacturer’s TOR. In addition, we find that a higher carbon tax rate always reduces total carbon emission reduction, and it may increase the manufacturer’s profit due to the increase in TOR demand.

    Graphical abstract

    Analyzing the influence of remanufacturer competition and carbon tax on the manufacturer’s decisions and the environment in a hybrid trade-old-for-new and trade-old-for-remanufactured supply chain.

    Abstract

    Facing serious environmental problems, governments and manufacturers are taking action to reduce carbon emissions. Among these endeavors, carbon tax policy are widely adopted by governments, trade-old-for-new (TON) and trade-old-for- remanufactured (TOR) are offered by manufacturers and subsidized by governments. To explore the effects of remanufacturer competition and carbon tax on the manufacturer’s TON and TOR decisions and the environment, we formulate three profit maximization models and present some theoretical and numerical analyses. The results show that, under the remanufacturer competition and carbon tax, the manufacturer’s optimal price and production decisions mainly depend on consumer willingness and carbon tax rate. A higher consumer willingness to manufacturer’s remanufactured products will decrease the demand for the manufacturer’s TON, but it always increases the demand foe the manufacturer’s TOR. A higher consumer willingness to remanufacturer’s products will not affect the demand for the manufacturer’s TON; however, it will reduce the demand for manufacturer’s TOR. In addition, we find that a higher carbon tax rate always reduces total carbon emission reduction, and it may increase the manufacturer’s profit due to the increase in TOR demand.

    • Public Summary

    • This paper analyzes the TON and TOR optimal decisions of manufacturer in a competitive market, and explores the impact of remanufacturer providing TOR on manufacturer.
    • This paper formulates three profit maximization models and presents some theoretical and numerical analyses. Further exploring the impact of residual value, consumer willingness to products and carbon tax on the TON and TOR decisions of manufacturer.
    • This paper investigates the TON and TOR decisions under the carbon tax policy. We find that a higher carbon tax rate may increase the manufacturer’s profit due to the increase in TOR demand.

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    • References(26)
  • [1]
    Luo R, Zhou L, Song Y, et al. Evaluating the impact of carbon tax policy on manufacturing and remanufacturing decisions in a closed-loop supply chain. International Journal of Production Economics, 2022, 245: 108408. doi: 10.1016/j.ijpe.2022.108408
    [2]
    Zhang G, Cheng P, Sun H, et al. Carbon reduction decisions under progressive carbon tax regulations: A new dual-channel supply chain network equilibrium model. Sustainable Production and Consumption, 2021, 27: 1077–1092. doi: 10.1016/j.spc.2021.02.029
    [3]
    Hu X, Yang Z, Sun J, et al. Carbon tax or cap-and-trade: Which is more viable for Chinese remanufacturing industry? Journal of Cleaner Production, 2020, 243: 118606. doi: 10.1016/j.jclepro.2019.118606
    [4]
    Chan H S, Li S, Zhang F. Firm competitiveness and the European Union emissions trading scheme. Energy Policy, 2013, 63: 1056–1064. doi: 10.1016/j.enpol.2013.09.032
    [5]
    Wang Y, Wang F. Production and emissions reduction decisions considering the differentiated carbon tax regulation across new and remanufactured products and consumer preference. Urban Climate, 2021, 40: 100992. doi: 10.1016/j.uclim.2021.100992
    [6]
    Zhu X, Wang M, Chen G, et al. The effect of implementing trade-in strategy on duopoly competition. European Journal of Operational Research, 2016, 248: 856–868. doi: 10.1016/j.ejor.2015.07.053
    [7]
    Shu T, Huang C, Chen S, et al. Trade-old-for-remanufactured closed-loop supply chains with carbon tax and government subsidies. Sustainability, 2018, 10: 3935. doi: 10.3390/su10113935
    [8]
    Han X, Yang Q, Shang J, et al. Optimal strategies for trade-old-for-remanufactured programs: Receptivity, durability, and subsidy. International Journal of Production Economics, 2017, 193: 602–616. doi: 10.1016/j.ijpe.2017.07.025
    [9]
    Ma Z, Zhou Q, Dai Y, et al. Optimal pricing decisions under the coexistence of “trade old for new” and “trade old for remanufactured” programs. Transportation Research Part E: Logistics and Transportation Review, 2017, 106: 337–352. doi: 10.1016/j.tre.2017.08.012
    [10]
    National Development and Reform Commission of China. Notice on initiating the pilot program of “trade old for remanufactured” for remanufactured products. https://www.ndrc.gov.cn/xxgk/zcfb/tz/ 201308/t20130829_963932.html. Accessed July 1, 2022. (in Chinese)
    [11]
    Wang M. The pricing decision research on the “trade-old-for-remanufactured” closed-loop supply chain. Thesis. Nanchang: East China Jiaotong University, 2020. (in Chinese)
    [12]
    Feng L. Research on the firms’ pricing and quality choice when considering trade-in programs. Thesis. Tianjin: Nankai University, 2019. (in Chinese)
    [13]
    Hong J, Quan Y. Closed-loop supply chain decision model based on trade-in and supply chain structural differences. Chinese Journal of Management Science, 2021: DOI: 10.16381/j.cnki.issn1003-207x.2021.0910. (in Chinese)
    [14]
    Bo H. Clsed-loop supply chain models with trade-old-for-new/ trade-old-for-remanufactured programs under government subsidy. Thesis. Chengdu: Southwest Jiaotong University, 2019. (in Chinese)
    [15]
    Du P, Jing Y. Product pricing and production decision of manufacturing/remanufacturing under strategies of old for remanufacturing and old for new. Computer Integrated Manufacturing Systems, 2020, 26 (10): 2827–2837. (in Chinese) doi: 10.13196/j.cims.2020.10.022
    [16]
    Zhu X, Wang M. Optimal pricing strategy of a hybrid trade old for new and remanufactured products supply chain. Optimization Letters, 2021, 15: 495–511. doi: 10.1007/s11590-018-1281-7
    [17]
    Miao Z, Mao H, Fu K, et al. Remanufacturing with trade-ins under carbon regulations. Computers and Operations Research, 2018, 89: 253–268. doi: 10.1016/j.cor.2016.03.014
    [18]
    Shu T, Liu Q, Chen S, et al. Pricing decisions of CSR closed-loop supply chains with carbon emission constraints. Sustainability, 2018, 10: 4430. doi: 10.3390/su10124430
    [19]
    Huang C. The study of trade-old-for-remanufactured supply chains strategies with carbon emission policy and government subsidies. Thesis. Changsha: Hunan University, 2020. (in Chinese)
    [20]
    Chen C K, Akmalul M. Analyses of the reward-penalty mechanism in green closed-loop supply. International Journal of Production Economics, 2019, 210: 211–223. doi: 10.1016/j.ijpe.2019.01.006
    [21]
    Yang L, Hua Y, Huang L. Collecting mode selection in a remanufacturing supply chain under cap-and-trade regulation. European Journal of Operational Research, 2020, 287: 480–496. doi: 10.1016/j.ejor.2020.04.006
    [22]
    Dou G, Choi T M. Does implementing trade-in and green technology together benefit the environment? European Journal of Operational Research, 2021, 295: 517–533. doi: 10.1016/j.ejor.2021.03.017
    [23]
    Wang N, He Q, Jiang B. Hybrid closed-loop supply chains with competition in recycling and product markets? International Journal of Production Economics, 2019, 217: 246–258. doi: 10.1016/j.ijpe.2018.01.002
    [24]
    Jing Y, Du P. Game analysis of manufacturer and remanufacturer under the strategies of old-for-remanufacturing and old-for-new. Journal of Systems Engineering, 2021, 36 (3): 339–352, 399. (in Chinese) doi: 10.13383/j.cnki.jse.2021.03.005
    [25]
    Sutherland J W, Adler D P, Haapala K R, et al. A comparison of manufacturing and remanufacturing energy intensities with application to diesel engine production. CIRP Annals-Manufacturing Technology, 2008, 57: 5–8. doi: 10.1016/j.cirp.2008.03.004
    [26]
    Ding J, Chen W, Wang W. Production and carbon emission reduction decisions for remanufacturing frms under carbon tax and take-back legislation. Computers & Industrial Engineering, 2020, 143 (1): 106419. doi: 10.1016/j.cie.2020.106419
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    Figure  1.  A hybrid TON and TOR supply chain with remanufacturer competition and carbon tax.

    Figure  2.  Impacts of the salvage value of used products on trade in rebate, demand of TOR, profits, and carbon emissions.

    Figure  3.  Impacts of customer’s preference coefficient for remanufactured products from manufacturer on price, demand, profit and carbon emission.

    Figure  4.  Impacts of customer’s preference coefficient for remanufactured products from remanufacturer on price, demand, profit and carbon emission.

    Figure  5.  Impacts of the carbon tax rate on price, trade in rebate, demand of TON and TOR, profit, and carbon emissions.

    [1]
    Luo R, Zhou L, Song Y, et al. Evaluating the impact of carbon tax policy on manufacturing and remanufacturing decisions in a closed-loop supply chain. International Journal of Production Economics, 2022, 245: 108408. doi: 10.1016/j.ijpe.2022.108408
    [2]
    Zhang G, Cheng P, Sun H, et al. Carbon reduction decisions under progressive carbon tax regulations: A new dual-channel supply chain network equilibrium model. Sustainable Production and Consumption, 2021, 27: 1077–1092. doi: 10.1016/j.spc.2021.02.029
    [3]
    Hu X, Yang Z, Sun J, et al. Carbon tax or cap-and-trade: Which is more viable for Chinese remanufacturing industry? Journal of Cleaner Production, 2020, 243: 118606. doi: 10.1016/j.jclepro.2019.118606
    [4]
    Chan H S, Li S, Zhang F. Firm competitiveness and the European Union emissions trading scheme. Energy Policy, 2013, 63: 1056–1064. doi: 10.1016/j.enpol.2013.09.032
    [5]
    Wang Y, Wang F. Production and emissions reduction decisions considering the differentiated carbon tax regulation across new and remanufactured products and consumer preference. Urban Climate, 2021, 40: 100992. doi: 10.1016/j.uclim.2021.100992
    [6]
    Zhu X, Wang M, Chen G, et al. The effect of implementing trade-in strategy on duopoly competition. European Journal of Operational Research, 2016, 248: 856–868. doi: 10.1016/j.ejor.2015.07.053
    [7]
    Shu T, Huang C, Chen S, et al. Trade-old-for-remanufactured closed-loop supply chains with carbon tax and government subsidies. Sustainability, 2018, 10: 3935. doi: 10.3390/su10113935
    [8]
    Han X, Yang Q, Shang J, et al. Optimal strategies for trade-old-for-remanufactured programs: Receptivity, durability, and subsidy. International Journal of Production Economics, 2017, 193: 602–616. doi: 10.1016/j.ijpe.2017.07.025
    [9]
    Ma Z, Zhou Q, Dai Y, et al. Optimal pricing decisions under the coexistence of “trade old for new” and “trade old for remanufactured” programs. Transportation Research Part E: Logistics and Transportation Review, 2017, 106: 337–352. doi: 10.1016/j.tre.2017.08.012
    [10]
    National Development and Reform Commission of China. Notice on initiating the pilot program of “trade old for remanufactured” for remanufactured products. https://www.ndrc.gov.cn/xxgk/zcfb/tz/ 201308/t20130829_963932.html. Accessed July 1, 2022. (in Chinese)
    [11]
    Wang M. The pricing decision research on the “trade-old-for-remanufactured” closed-loop supply chain. Thesis. Nanchang: East China Jiaotong University, 2020. (in Chinese)
    [12]
    Feng L. Research on the firms’ pricing and quality choice when considering trade-in programs. Thesis. Tianjin: Nankai University, 2019. (in Chinese)
    [13]
    Hong J, Quan Y. Closed-loop supply chain decision model based on trade-in and supply chain structural differences. Chinese Journal of Management Science, 2021: DOI: 10.16381/j.cnki.issn1003-207x.2021.0910. (in Chinese)
    [14]
    Bo H. Clsed-loop supply chain models with trade-old-for-new/ trade-old-for-remanufactured programs under government subsidy. Thesis. Chengdu: Southwest Jiaotong University, 2019. (in Chinese)
    [15]
    Du P, Jing Y. Product pricing and production decision of manufacturing/remanufacturing under strategies of old for remanufacturing and old for new. Computer Integrated Manufacturing Systems, 2020, 26 (10): 2827–2837. (in Chinese) doi: 10.13196/j.cims.2020.10.022
    [16]
    Zhu X, Wang M. Optimal pricing strategy of a hybrid trade old for new and remanufactured products supply chain. Optimization Letters, 2021, 15: 495–511. doi: 10.1007/s11590-018-1281-7
    [17]
    Miao Z, Mao H, Fu K, et al. Remanufacturing with trade-ins under carbon regulations. Computers and Operations Research, 2018, 89: 253–268. doi: 10.1016/j.cor.2016.03.014
    [18]
    Shu T, Liu Q, Chen S, et al. Pricing decisions of CSR closed-loop supply chains with carbon emission constraints. Sustainability, 2018, 10: 4430. doi: 10.3390/su10124430
    [19]
    Huang C. The study of trade-old-for-remanufactured supply chains strategies with carbon emission policy and government subsidies. Thesis. Changsha: Hunan University, 2020. (in Chinese)
    [20]
    Chen C K, Akmalul M. Analyses of the reward-penalty mechanism in green closed-loop supply. International Journal of Production Economics, 2019, 210: 211–223. doi: 10.1016/j.ijpe.2019.01.006
    [21]
    Yang L, Hua Y, Huang L. Collecting mode selection in a remanufacturing supply chain under cap-and-trade regulation. European Journal of Operational Research, 2020, 287: 480–496. doi: 10.1016/j.ejor.2020.04.006
    [22]
    Dou G, Choi T M. Does implementing trade-in and green technology together benefit the environment? European Journal of Operational Research, 2021, 295: 517–533. doi: 10.1016/j.ejor.2021.03.017
    [23]
    Wang N, He Q, Jiang B. Hybrid closed-loop supply chains with competition in recycling and product markets? International Journal of Production Economics, 2019, 217: 246–258. doi: 10.1016/j.ijpe.2018.01.002
    [24]
    Jing Y, Du P. Game analysis of manufacturer and remanufacturer under the strategies of old-for-remanufacturing and old-for-new. Journal of Systems Engineering, 2021, 36 (3): 339–352, 399. (in Chinese) doi: 10.13383/j.cnki.jse.2021.03.005
    [25]
    Sutherland J W, Adler D P, Haapala K R, et al. A comparison of manufacturing and remanufacturing energy intensities with application to diesel engine production. CIRP Annals-Manufacturing Technology, 2008, 57: 5–8. doi: 10.1016/j.cirp.2008.03.004
    [26]
    Ding J, Chen W, Wang W. Production and carbon emission reduction decisions for remanufacturing frms under carbon tax and take-back legislation. Computers & Industrial Engineering, 2020, 143 (1): 106419. doi: 10.1016/j.cie.2020.106419
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