Study On Game Models For Auto Parts Remanufacturing Based On Government Involement

With the shortage of resources, environmental degradation and other sustainable issues, resource recycling has gradually become the focus of researchers and practioners. As a new environmental approach, remanufacturing has gained attention from the governments and the industries. The automotive industry is one of the most important industries consuming large quantities of resources and energy. Hence, remanufacturing of auto parts (such as engines) can effectively reduce the consumption of resources and energy. And with applying the remanufacturing strategy, the reduction of environmental pollution and the sustainable development of the auto industry can also be expected.Although the Chinese government has strongly promoted the development of auto parts remanufacturing industry, the auto parts remanufacturing industry is still in its infancy, and faces a series of development obstacles. The formal remanufacturing industry has been suffering the serious supply deficiency problem, due to the inefficiency of its collecting network. And, with the absence of designing for remanufacturing, the remanufacturing of used products is quite difficult. Further, the prejudice of consumers on auto parts remanufactured products has negatively influence the sales of the remanufactured products. Based on the background above, this dissertation, focusing on the three critical stages, i.e. recycling, design for remanufacturing, and remanufacturing products sales, establishes the game theoretical models to analyze the effect of different policies on game roles. The main results are as follows,Firstly, in order to analyze the effect of different governmental policies on recycling channels of end-of-life vehicles, a game model between the formal recycling channel and the informal recycling channel is established. In the model, three conditions are taken into account:the first is that government does not adopt any policies; the second is that government takes the subsidy policy to formal recyclers; and the third is that government takes the monitoring control policy to informal recyclers. We compare the influences of government subsidies and effort of government monitoring control on the unit recycling price, recycling product quality, profit and environment in the above three circumstances. The results show that, the formal recyclers and informal recyclers will improve the unit recycling price when government takes subsidy policy; the formal recycler reduces the unit recycling price and informal recycler improves the unit recycling price when government takes the monitoring control policy. The effects of governmental different policies on the unit recycling price, recycling product quality, profit and environment are related to the amount of government subsidies, effort of government monitoring control, the coefficient of unit recycling price of formal recyclers and the coefficient of effort of government regulation. Secondly, in order to analyze the effect of designing for auto parts remanufacturing on competition mechanism between OEM and remanufacturer, a game model between an OEM and a remanufacturer is established. In this model, two conditions are taken into account-one is that OEM charges for the fee of designing for remanufacturing, the other is that remanufacturer charges for the fee of designing for remanufacturing. It comparatively analyzes the influence of the level of designing for remanufacturing, border recovery of waste products, retail prices, quantity of sale and sales profits by unit remanufacturing cost savings and unit benefit of two products from designing for remanufacturing. Further, the impact of government subsidies to different objects on the degree of design for remanufacturing is comparatively analyzed. The results show that, when remanufacturing products do not enter the market, design for remanufacturing can lower unit retail price, increase sales and sales profits of new products. As the ratio between unit benefit of two products from designing for remanufacturing belongs to a certain range, regardless of OEM or remanufacturer charging for the fee of designing for remanufacturing, OEM will choose to design for remanufacturing; it is better giving subsidies to OEM than to remanufacturer when OEM charges for the fee of designing for remanufacturing.Finally, in order to analyze the impact of government subsidies on sales of remanufacturing auto parts, a two-stage game model between an OEM, a remanufacturer and a retailer based on government subsidies for "exchanging old with remanufactured one" is established. Three conditions are compared. The first one is without subsidies, the other two are with subsidies to remanufacturers, and to consumers who buy remanufactured products based on the game model. The influence of government different policies on wholesale prices, retail prices, sales volume, profit, consumer surplus and environmental impacts is analyzed. Moreover, the influence of patent fees on government subsidies is explored. The results show as follows:when the demand of remanufacturing product is not limited by the recycled waste products, government subsidies can reduce two products unit retail price, increase the profits of remanufacturer and retailers and raise consumer surplus; when the demand of remanufacturing product is limited by recycled waste products, government subsidy can increase the two products wholesale price and profit of two products manufacturers, but will reduce the retailer’s sales profit; the patent fees not only can help OEM obtain the profit of remanufacturing, and also can transfer the government subsidies to OEM.