Implications of a Carbon Tax Mechanism in Remanufacturing Outsourcing on Carbon Neutrality

Jie Deng, Xuwei Luo and Mengsi Hu
Additional contact information
Jie Deng: Law School, Southwestern University of Finance and Economics, Chengdu 610074, China
Xuwei Luo: School of Management and Economic, University of Electronic Science and Technology of China, Chengdu 611731, China
Mengsi Hu: School of Management and Economic, University of Electronic Science and Technology of China, Chengdu 611731, China

IJERPH, 2022, vol. 19, issue 9, 1-21

Abstract: Many governments have imposed methods such as a carbon tax that aim to even out the negative effects of carbon emissions. The taxes levied on different agents lead to different make–buy decisions for production structures and different environmental outcomes. Some original equipment manufacturers (OEMs) outsource remanufacturing to independent remanufacturers (IRs). Thus, a question arises: What are the implications of carbon taxes levied on different agents on remanufacturing outsourcing decisions? To answer this question, we developed two models: (1) acting as common brand owners, OEMs can be taxed for both new and remanufactured products, or (2) acting as different emitters for production and remanufacturing, OEMs are taxed for new products; however, all carbon taxes related to remanufacturing are levied on IRs. Our analysis reveals that, regarding economic performance, firms should undertake a carbon emission tax on their own initiative because this allows the taxpayer to choose more units for its preferred products and leaves its rivals at a huge disadvantage. Moreover, regarding environmental sustainability, carbon emission taxes indeed lead to mitigating the effects of carbon emissions per unit; however, environmental agencies should also pay attention to reducing the total carbon emissions by limiting the volume effects.

Keywords: sustainable operations; carbon monitoring; environmental policy; 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 (2)

Downloads: (external link)
https://www.mdpi.com/1660-4601/19/9/5520/pdf (application/pdf)
https://www.mdpi.com/1660-4601/19/9/5520/ (text/html)

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:gam:jijerp:v:19:y:2022:i:9:p:5520-:d:807374

Access Statistics for this article

IJERPH is currently edited by Ms. Jenna Liu

More articles in IJERPH from MDPI
Bibliographic data for series maintained by MDPI Indexing Manager ().