Carbon Emission Constraint Policy in an OEM and Outsourcing Remanufacturer Supply Chain with Consumer Preferences

Yunting Feng, Yong Geng, Ge Zhao and Mengya Li
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Yunting Feng: The Glorious Sun School of Business and Management, Donghua University, Shanghai 200051, China
Yong Geng: School of International and Public Affairs, Shanghai Jiao Tong University, Shanghai 200240, China
Ge Zhao: School of Politics and Public Administration, Zhengzhou University, Zhengzhou 450001, China
Mengya Li: School of Business, Zhengzhou University, Zhengzhou 450001, China

IJERPH, 2022, vol. 19, issue 8, 1-16

Abstract: Carbon emission reduction has been a consensus goal for most countries to achieve environmental sustainability. The use of carbon emission trading policies has been generally considered by the governments. Remanufacturing, as an effective way to reduce carbon emission, is incorporated together with the tool of carbon emission policy to construct a low-carbon supply chain in this paper. We analyze the carbon emission reduction and profit maximization problem among enterprises of original equipment manufacturers (OEMs) and their outsourcing remanufacturers, integrating the impact of the carbon emission constraint policy and the carbon market. Considering consumer preferences on low-carbon products and recycling rates of waste products, we construct a Stackelberg game model (dominated by the OEM) and analyze the impact of a carbon emission constraint policy on sales price, volume, carbon emission, and revenue of new and remanufactured products in the supply chain system. The results suggest that the upper bound set by the government on carbon emission for enterprises positively affects sales volume of new products and negatively affects sales prices of both products. Moreover, the discount rate of carbon emission constraint negatively affects sales volume of new products and positively affects sales prices of both products. Notably, the carbon emission constraint policy has impacts on the production decisions of both manufacturers on an economic scale. When the upper bound of carbon emission is equal to a certain threshold, the OEM could obtain the greatest revenue. The results provide a new perspective for the government to attain the goal of carbon emission reduction and not sacrifice economic growth. Managers in outsourcing remanufacturers and OEMs could also be implicated from our results to collaborate in allocating remanufacturing orders to achieve win-win opportunities between them.

Keywords: carbon emission constraints; OEM; remanufacturer; outsourcing remanufacturing (search for similar items in EconPapers)
JEL-codes: I I1 I3 Q Q5 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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