Equilibrium Analysis Of The Remanufacturing Closed-loop Supply Chain With Public Subsidies

With the depletion of resources and enhanced environmental awareness, more and more countries have begun to pay attention to the recycling and remanufacturing of waste products. The authorities have gradually realized the importance of the development of circular economy and the management issue of remanufacturing closed-loop supply chain. Choosing different remanufacturing incentive policy to the enterprises will have different effects on the closed-loop supply chain and the social environment. In this paper, we use the ideas and the methods of game theory, supply chain management theory and information economics to study the remanufacturing closed-loop supply chain. In the assumption of third-party recycling, we propose a new idea that the government as a decision-maker subsidies the remanufacturing activities and establish a set of new game model to study how the government financial subsidy as an exogenous parameter guides the remanufacturing behavior in the closed-loop supply chain.By referring literatures and consider the actual operation of the enterprises, this paper will model and analyze three different industrial organization(i.e. three different recycling decision mode of the recycler). The first mode is that the recycler takes recycling price as its decision variable. We establish the Stackelberg Game Model of closed-loop supply chain with government subsidizing the remanufacturing activity. We solve four different government subsidy policies of no financial subsidy, the government financial subsidy as an exogenous parameter, the government financial subsidy as an endogenous variable with the target of government's own utility, the government financial subsidy as an endogenous variable with the target of maximize social welfare and analyze how different government subsidy policies will impact on the members profit in the closed-loop supply chain and the social environment. The second mode is that the recycler takes its recycling effort level as decision variable. In this background, we study the government subsidy endogenized model and analyze the impacts of the endogenous government subsidy. The third mode is that the manufacturer and recycler design an optimal incentive contract between them. In this model, the proportion of profit sharing is the manufacturer's decision variable and the recycling effort level is the recycler's decision variable. In this background, we study and analyze the impacts of different government subsidy policies on the members profit in the closed-loop supply chain and the social environment. Through analysis, we have some conclusions that in the background of the first and the second industrial organization, the fiscal expenditure of endogenous financial subsidy is the minimum value of financial subsidy as an exogenous parameter, and in the background of the third industrial organization, whether the government decides to participate in the closed-loop supply chain with the variable of endogenous subsidy or not is related to the waste products stock in the society.Implementation of government management in closed-loop supply chain is an effective way to achieve circular economy and promote the development of sustainable economic. This paper is the related research of government taking subsidy as decision variable to participate in the remanufacturing supply chain, hoping to provide a reference for the government's remanufacturing subsidizing policy and promote the application of government subsidy to manage the remanufacturing closed-loop supply chain.