The Study Of Pricing Decisions And Regulatory Policies In The Remanufacturing System

We study a dual-product dynamic pricing problem and regulation environmen-tal policy choice problem for a remanufacturing system, where a monopolist makes new and remanufactured products that compete for a certain market share, maxi-mizing the manufacturer's profit, and the regulator make environmental regulation policy decision within the subsidy policy and tax policy to maximize the social welfare.Referring to the manufacturer's decision, assuming that consumers, who are price sensitive and environmentally conscious, can obtain subsidies when purchasing remanufactured products. The problem is first formulated as a two-period produc-tion planning model grounded on a valuation-based demand function. Analytical results show that the environmental consciousness of consumers and subsidy from government have significant effects on the market share and the prices of the two products. We then extend the model to two general models, namely, multi-period model and infinite-period model. For the multi-period model, we present the gen-eral solutions of the problem, based on which the optimal solutions can be obtained for any T-period production planning horizon. In particular, we analyze the steady state and present its related optimal solutions of the infinite-period model. The analysis shows that the optimal price of the remanufactured product is always in-creasing in the discount rate of the remanufactured product (i.e., a); the optimal price of the new product decreases in a if the consumers' green awareness is at a low level, but it increases in a if the consumers' green awareness is at a high level and a is at a low level.For the regulator's decision, we study the regulator's policy decision within the subsidy and tax policies, based on the manufacturer's steady-state solutions of the infinite-period model. Firstly, the regulator optimizes his social welfare through optimizing the tax or subsidy level. We focus on the impact of the optimal policy decisions on the environmental impact, the results show that because of the dif-ference in the cost of new products, such impact is non-monotony.Comaparing the effect of policies on social welfare, the analytical results indicate that only when the unit environment cost is at low level, can the tax subsidy policy make sense.Otherwise, it is better to impose tax on the manufacturer to curb emissions. Beside this, we also focus the effect of market characteristics on the effective interval of policies, the results show that the interval for tax policy becomes more wider with high environmental green awareness.