Comparatively Analyzing the Impact of Government Subsidy and Carbon Tax Policy on Authorized Remanufacturing

Biao Li, Yong Geng, Xiqiang Xia, Dan Qiao and Hao Wang
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Biao Li: College of Business, Zhengzhou University, Zhengzhou 450001, China
Yong Geng: College of Environmental Science and Engineering, Shanghai Jiao Tong University, Shanghai 200240, China
Xiqiang Xia: College of Business, Zhengzhou University, Zhengzhou 450001, China
Dan Qiao: College of Business, Zhengzhou University, Zhengzhou 450001, China
Hao Wang: Department of Geography and Planning, University of Toronto, Toronto, ON M5S 3G3, Canada

IJERPH, 2021, vol. 18, issue 16, 1-18

Abstract: Authorized remanufacturing is an important means to achieve green manufacturing and carbon neutrality. In this study, a game theory model between a manufacturer and a remanufacturer was constructed to analyze the impact of government subsidies and carbon tax policies on authorized remanufacturing. Based on the game theory model, the effects of two government policies on the optimal solution, namely, the unit cost of remanufacturing product authorization and the waste product recovery rate, were compared and analyzed. This analysis could provide a reference for the government to improve and formulate relevant remanufacturing policies. The main results are as follows: government subsidy policies may increase the unit cost of remanufacturing product authorization and the rates of waste product recovery; government carbon tax policies may not affect the unit cost of remanufacturing product authorization, and increase the rates of waste product recovery; the government subsidy policy may not affect the unit retail price of new products, and reduces the unit retail price of remanufactured products; the government subsidy and carbon tax policies may reduce sales of new products and increase sales of remanufactured products; the government subsidies may increase the revenue of the original equipment manufacturer (OEM) and the remanufacturer; and the government carbon tax policies may increase the revenue of the remanufacturer. However, government carbon tax policies increase the revenue of the OEM only when the new product carbon tax amount is higher than a certain threshold. The impact of the two policies on the environment is related to the ratio of the two products’ impact on the environment, i.e., the quota ratio between the unit government carbon tax of the new product and the unit government subsidy of the remanufactured product. Finally, the consumer surplus is maximized when the government adopts the subsidy policy and lowest when the government adopts the carbon tax policy.

Keywords: government subsidies; carbon tax; authorization remanufacturing; game model (search for similar items in EconPapers)
JEL-codes: I I1 I3 Q Q5 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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