Closed-loop supply chain decisions considering carbon tax policy under the recycler’s risk aversion

Bengang Gong, Zihao Li, Jinshi Cheng () and Xiaoqi Zhang
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Bengang Gong: Anhui Polytechnic University, School of Economics and Management
Zihao Li: Anhui Polytechnic University, School of Economics and Management
Jinshi Cheng: Anhui Polytechnic University, School of Economics and Management
Xiaoqi Zhang: Anhui Polytechnic University, School of Economics and Management

Annals of Operations Research, 2025, vol. 355, issue 2, No 17, 1876 pages

Abstract: Abstract The recycling and remanufacturing of electronic waste are critical for resource conservation and the sustainable development of both society and the environment. However, uncertainty about the quality of recycled products introduces risk aversion. To address this issue, the present study develops a differential decision-making model that distinguishes between manufacturers who consider, and those who ignore, the risk-averse behavior of recyclers. The analysis examines how recyclers’ risk aversion affects key factors in a closed-loop supply chain, including sales price, recovery rate, demand, and the profits and utilities of both manufacturers and recyclers. Our findings suggest that achieving optimal recovery rates, demand, and utility for both parties requires that carbon tax formulation aligns with recovery costs. Additionally, this tax serves as a critical benchmark for determining the repurchase price of waste products. When recyclers exhibit risk aversion, increasing this aversion results in higher product sales prices, but also leads to lower demand, recovery rates, and profits for both manufacturers and recyclers. In contrast, manufacturers who disregard recyclers’ risk aversion may lower product sales prices, thereby increasing recovery rates, demand, and recycler utility. However, acknowledging and addressing risk aversion has a positive effect on manufacturer profits and utility.

Keywords: Closed-loop supply chain; Carbon tax; Risk aversion; Uncertainty of recovery quality (search for similar items in EconPapers)
Date: 2025
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DOI: 10.1007/s10479-025-06671-z

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