Outsourcing decision-making in global remanufacturing supply chains: The impact of tax and tariff regulations

Wei Li, Hui Sun, Hao Dong, Yuqin Gan and Lenny Koh

European Journal of Operational Research, 2023, vol. 304, issue 3, 997-1010

Abstract: In contemporary international remanufacturing supply chains, whether an original equipment manufacturer (OEM) engages in remanufacturing operations or outsources to a third-party remanufacturer (TPR) is influenced by tax and tariff regulations. This study develops a two-stage game model for the decision-making of an OEM from an exporting country showing that the optimal remanufacturing model is significantly affected by the tax and tariff regulations of the importing country and more particularly, the difference between sales tax on remanufactured products and the unit product import tariffs on new products. The model selections for the OEM and the importing country align when this difference is close to zero. This paper is one of the few examining the impact of tax and tariff regulations on outsourcing decisions in remanufacturing contexts, which is largely neglected in the extant literature but has become increasingly important, especially with recent development trends of deglobalization (e.g., Brexit, the US–China trade war, and various sanctions). The significance of this study is threefold: the work makes novel theoretical contributions to the decision-making game model with tax and tariff constructs taken into consideration, has practical implementations for optimizing the strategic business deployment of OEMs, and has implications for consideration of policy and social welfare by policy makers of the destination country.

Keywords: Decision analysis; Remanufacturing; Outsourcing; Global supply chain; Tax and tariff (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (11)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0377221722003903
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:ejores:v:304:y:2023:i:3:p:997-1010

DOI: 10.1016/j.ejor.2022.05.016

Access Statistics for this article

European Journal of Operational Research is currently edited by Roman Slowinski, Jesus Artalejo, Jean-Charles. Billaut, Robert Dyson and Lorenzo Peccati

More articles in European Journal of Operational Research from Elsevier
Bibliographic data for series maintained by Catherine Liu ().