A comparative analysis of carbon tax strategies basing on outsourcing remanufacturing: Differential VS progressive

Xiqiang Xia, Jiangwen Li and Senlin Zhao

International Journal of Production Economics, 2025, vol. 281, issue C

Abstract: To systematically investigate the consequences of carbon tax policies in relation to outsourced remanufacturing, this study develops four game-theoretic models under differential and progressive carbon taxes, along with decentralized and centralized decision-making scenarios. We also explore two coordination mechanisms—cost-sharing contract and cost-sharing-fixed-fee contract—to enhance collaboration between the original equipment manufacturer (OEM) and outsourced remanufacturer (OR). Relevant findings include: (1) The effectiveness of carbon tax policies is closely tied to the tax rate per unit of carbon emissions. When the ratio of the difference between the new-product carbon tax and a progressive carbon tax to remanufactured-product carbon tax per unit of emission is beyond a certain threshold, the differential carbon tax policy stimulates outsourcing and advances the remanufacturing sector. Meanwhile, environmental performance and consumer surplus have improved. When the ratio falls within a specific range, a progressive carbon tax policy can expand the market size and boost the profits of both manufacturers. (2) In centralized decision-making, the recycling rate and the transaction volume of remanufactured products increase, resulting in enhanced supply chain performance. (3) Cost-sharing contract enhances used products' collection rate and the OEM's profitability, while a cost-sharing-fixed-fee contract further augments OR's profits. Furthermore, optimal carbon tax policy selection should account for consumer preferences. Carbon tax policies, decision-making structures, coordination mechanisms, and consumer preferences jointly shape the supply chain dynamics, necessitating a holistic approach to optimize overall performance.

Keywords: Differential carbon tax; Progressive carbon tax; Outsourced remanufacturing; Coordination mechanism (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:proeco:v:281:y:2025:i:c:s092552732400358x

DOI: 10.1016/j.ijpe.2024.109501

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