IDEAS home Printed from https://ideas.repec.org/a/gam/jmathe/v11y2023i13p2817-d1177448.html
   My bibliography  Save this article

The Impact of Carbon Allowance Allocation Rules on Remanufacturing Decisions in a Closed-Loop Supply Chain

Author

Listed:
  • Yanli Fang

    (School of Mathematics and Statist, Huizhou University, Huizhou 516007, China)

  • Zhuoyi Ren

    (School of Management, Guizhou University, Guiyang 550025, China)

  • Fang Yang

    (School of Economics and Management, Huizhou University, Huizhou 516007, China)

Abstract

Remanufacturing has been widely adopted in the industrial sector due to carbon emission constraints and economic benefits. This paper discusses a closed-loop supply chain composed of an original equipment manufacturer (OEM), an authorized remanufacturer (AR), that is licensed by the OEM to carry out remanufacturing activities in the presence of strategic consumers under carbon cap-and-trade regulations. We establish a Stackelberg game model to identify the optimal manufacturing/remanufacturing decisions made by chain members, and compare the impacts of two different carbon allowance allocation rules on the optimal production decisions and profits, and on the environment. The results showed that optimal decisions in a closed-loop supply chain are affected by the carbon price, carbon allowance allocation, and consumer preferences for remanufactured products. In addition, for high-emission enterprises, the grandfathering rule performs better than the benchmarking rule, yielding higher profits and less environmental impact. The government should take into account the actual economic and production technological developments, implement the benchmarking rule for low-emission enterprises, and apply the grandfathering rule to high-emission enterprises.

Suggested Citation

  • Yanli Fang & Zhuoyi Ren & Fang Yang, 2023. "The Impact of Carbon Allowance Allocation Rules on Remanufacturing Decisions in a Closed-Loop Supply Chain," Mathematics, MDPI, vol. 11(13), pages 1-24, June.
    • Handle: RePEc:gam:jmathe:v:11:y:2023:i:13:p:2817-:d:1177448
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/2227-7390/11/13/2817/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/2227-7390/11/13/2817/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Philippe Menanteau & Dominique Finon & Marie-Laure Lamy, 2003. "Prices versus quantities :environmental policies for promoting the development of renewable energy," Post-Print halshs-00480457, HAL.
    2. Zou, Zong-Bao & Wang, Jian-Jun & Deng, Gui-Shi & Chen, Haozhe, 2016. "Third-party remanufacturing mode selection: Outsourcing or authorization?," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 87(C), pages 1-19.
    3. Yanting Huang & Zongjun Wang, 2019. "Pricing and production decisions in a closed-loop supply chain considering strategic consumers and technology licensing," International Journal of Production Research, Taylor & Francis Journals, vol. 57(9), pages 2847-2866, May.
    4. Fuqiang Zhang & Renyu Zhang, 2018. "Trade-in Remanufacturing, Customer Purchasing Behavior, and Government Policy," Manufacturing & Service Operations Management, INFORMS, vol. 20(4), pages 601-616, October.
    5. Ehsan Shekarian & Simme Douwe Flapper, 2021. "Analyzing the Structure of Closed-Loop Supply Chains: A Game Theory Perspective," Sustainability, MDPI, vol. 13(3), pages 1-32, January.
    6. Menanteau, Philippe & Finon, Dominique & Lamy, Marie-Laure, 2003. "Prices versus quantities: choosing policies for promoting the development of renewable energy," Energy Policy, Elsevier, vol. 31(8), pages 799-812, June.
    7. Yenipazarli, Arda, 2016. "Managing new and remanufactured products to mitigate environmental damage under emissions regulation," European Journal of Operational Research, Elsevier, vol. 249(1), pages 117-130.
    8. Alegoz, Mehmet & Kaya, Onur & Bayindir, Z. Pelin, 2021. "A comparison of pure manufacturing and hybrid manufacturing–remanufacturing systems under carbon tax policy," European Journal of Operational Research, Elsevier, vol. 294(1), pages 161-173.
    9. Xu, Xiaoping & Zhang, Wei & He, Ping & Xu, Xiaoyan, 2017. "Production and pricing problems in make-to-order supply chain with cap-and-trade regulation," Omega, Elsevier, vol. 66(PB), pages 248-257.
    10. Chenxu Ke & Bo Yan, 2022. "Trade-in value effects of used products in remanufacturing with considering consumer purchase behavior," Journal of the Operational Research Society, Taylor & Francis Journals, vol. 73(3), pages 608-633, March.
    11. Yao Chen & Fangruo Chen, 2019. "On the Competition between Two Modes of Product Recovery: Remanufacturing and Refurbishing," Production and Operations Management, Production and Operations Management Society, vol. 28(12), pages 2983-3001, December.
    12. Zuqing Huang & Wei Shao & Lijun Meng & Guoqing Zhang & Qiang (Patrick) Qiang, 2022. "Pricing Decision for a Closed-Loop Supply Chain with Technology Licensing under Collection and Remanufacturing Cost Disruptions," Sustainability, MDPI, vol. 14(6), pages 1-19, March.
    13. R. Canan Savaskan & Shantanu Bhattacharya & Luk N. Van Wassenhove, 2004. "Closed-Loop Supply Chain Models with Product Remanufacturing," Management Science, INFORMS, vol. 50(2), pages 239-252, February.
    14. Yang, Wen & Pan, Yanchun & Ma, Jianhua & Yang, Tianyue & Ke, Xiao, 2020. "Effects of allowance allocation rules on green technology investment and product pricing under the cap-and-trade mechanism," Energy Policy, Elsevier, vol. 139(C).
    15. Lan Wang & Gangshu (George) Cai & Andy A. Tsay & Asoo J. Vakharia, 2017. "Design of the Reverse Channel for Remanufacturing: Must Profit-Maximization Harm the Environment?," Production and Operations Management, Production and Operations Management Society, vol. 26(8), pages 1585-1603, August.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Xin Li & Kenan Li & Yongjian Li, 2023. "Platform Operations under Dual-Channel Catering Supply Chain," Mathematics, MDPI, vol. 11(16), pages 1-33, August.
    2. Yutong Lang & Xiaoyu Ji & Yingtong Wang & Yingfu He, 2024. "Carbon Asset Management Mode Selection for Capital-Constrained Enterprises," Mathematics, MDPI, vol. 12(22), pages 1-29, November.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Fang, Chang & Fan, Shuyi & Chi, Mingxiang & Wang, Weizhong, 2023. "The optimal remanufacturing strategy, returned quality choice and independent remanufacturers’ advantage for tackling extreme weather," International Journal of Production Economics, Elsevier, vol. 259(C).
    2. He, Qidong & Wang, Nengmin & Browning, Tyson R. & Jiang, Bin, 2022. "Competitive collection with convenience-perceived customers," European Journal of Operational Research, Elsevier, vol. 303(1), pages 239-254.
    3. Jie Deng & Xuwei Luo & Mengsi Hu, 2022. "Implications of a Carbon Tax Mechanism in Remanufacturing Outsourcing on Carbon Neutrality," IJERPH, MDPI, vol. 19(9), pages 1-21, May.
    4. Yunting Feng & Yong Geng & Ge Zhao & Mengya Li, 2022. "Carbon Emission Constraint Policy in an OEM and Outsourcing Remanufacturer Supply Chain with Consumer Preferences," IJERPH, MDPI, vol. 19(8), pages 1-16, April.
    5. Zhou, Qin & Meng, Chao & Sheu, Jiuh-Biing & Yuen, Kum Fai, 2023. "Remanufacturing mode and strategic decision: A game-theoretic approach," International Journal of Production Economics, Elsevier, vol. 260(C).
    6. Qiao, Haike & Su, Qin, 2021. "Distribution channel and licensing strategy choice considering consumer online reviews in a closed-loop supply chain," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 151(C).
    7. Yang, Lei & Hu, Yijuan & Huang, Lijuan, 2020. "Collecting mode selection in a remanufacturing supply chain under cap-and-trade regulation," European Journal of Operational Research, Elsevier, vol. 287(2), pages 480-496.
    8. Zhangwei Feng & Na Luo & Yanping Liu, 2021. "Trade-in Strategy and Competition between Two Independent Remanufacturers," IJERPH, MDPI, vol. 18(13), pages 1-13, June.
    9. Yang, Lei & Gao, Muyi & Feng, Lipan, 2022. "Competition versus cooperation? Which is better in a remanufacturing supply chain considering blockchain," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 165(C).
    10. Zhou, Qin & Meng, Chao & Yuen, Kum Fai, 2021. "Remanufacturing authorization strategy for competition among OEM, authorized remanufacturer, and unauthorized remanufacturer," International Journal of Production Economics, Elsevier, vol. 242(C).
    11. Zhao, Senlin & Wang, Mengxiang & Zhu, Qinghua & Zhou, Qin & Mao, Rongrong, 2024. "Effects of information asymmetry on green advertising for remanufacturing within a closed-loop supply chain," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 188(C).
    12. Zhou, Tao & Li, Kai, 2024. "Designing manufacturer’s new product technology for a closed-loop supply chain with consumer context effect," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 188(C).
    13. Zongbao Zou & Cong Wang & Qinjia Zhong, 2022. "How Does Retailer-Oriented Remanufacturing Affect the OEM’s Quality Choice?," Sustainability, MDPI, vol. 14(13), pages 1-21, June.
    14. Linan Zhou & Gengui Zhou & Hangying Li & Jian Cao, 2023. "Channel Selection of Closed-Loop Supply Chain for Scrapped Agricultural Machines Remanufacturing," Sustainability, MDPI, vol. 15(6), pages 1-30, March.
    15. Li, Wei & Tian, Ruimiao & Chen, Jing, 2024. "Original equipment manufacturer with remanufacturing: Outsourcing strategy and organizational structure," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 187(C).
    16. Niu, Baozhuang & Ruan, Yiyuan & Yu, Xinhu, 2024. "Purchasing new for remanufacturing: Sourcing co-opetition, tax-planning and data validation," International Journal of Production Economics, Elsevier, vol. 273(C).
    17. Liu, Chang-Yi & Wang, Hui & Tang, Juan & Chang, Ching-Ter & Liu, Zhi, 2021. "Optimal recovery model in a used batteries closed-loop supply chain considering uncertain residual capacity," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 156(C).
    18. Chenxu Ke & Bo Yan & Jingna Ji, 2023. "Pricing new and remanufactured products under patent protection and government intervention," Annals of Operations Research, Springer, vol. 324(1), pages 131-161, May.
    19. Niu, Baozhuang & Ruan, Yiyuan & Zeng, Fanzhuo, 2022. "Promoting remanufacturing through subsidy and environment tax: Channel co-opetition, incentive alignment and regulation optimization," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 166(C).
    20. Qian, Zhifeng & Day, Steven James & Ignatius, Joshua & Dhamotharan, Lalitha & Chai, Junwu, 2024. "Digital advertising spillover, online-exclusive product launches, and manufacturer-remanufacturer competition," European Journal of Operational Research, Elsevier, vol. 313(2), pages 565-586.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gam:jmathe:v:11:y:2023:i:13:p:2817-:d:1177448. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.