Government Regulations on Closed-Loop Supply Chain with Evolutionarily Stable Strategy

Ziang Liu and Tatsushi Nishi
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Ziang Liu: Division of Mathematical Science for Social Systems, Graduate School of Engineering Science, Osaka University, 1-3 Machikaneyama-Cho, Toyonaka City 560-8531, Japan
Tatsushi Nishi: Division of Mathematical Science for Social Systems, Graduate School of Engineering Science, Osaka University, 1-3 Machikaneyama-Cho, Toyonaka City 560-8531, Japan

Sustainability, 2019, vol. 11, issue 18, 1-29

Abstract: The government plays a critical role in the promotion of recycling strategy among supply chain members. The purpose of this study is to investigate the optimal government policies on closed-loop supply chains and how these policies impact the market demand and the returning strategies of manufacturers and retailers. This paper presents a design of closed-loop supply chains under government regulation by considering a novel three-stage game theoretic model. Firstly, Stackelberg models are adopted to describe the one-shot game between the manufacturer and the retailer in a local market. Secondly, based on the Stackelberg equilibriums, a repeated and dynamic population game is developed. Thirdly, the government analyzes the population game to find the optimal tax and subsidy policies in the whole market. To solve the proposed model, the idea of backward induction is adopted. The results suggest that, by collecting tax and allocating subsidy, the government can influence the market demands and return rates. The centralized supply chain structure is always preferred for the government and the market. The government prefers to allocate subsidy to low-pollution, low-profit remanufactured products. The environmental attention of the government affects the subsidy policy.

Keywords: closed-loop supply chain; Stackelberg competition; evolutionary game; government regulation (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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