IDEAS home Printed from https://ideas.repec.org/a/gam/jsusta/v14y2022i18p11333-d911182.html
   My bibliography  Save this article

Analysis of the Impact of Remanufacturing Process Innovation on Closed-Loop Supply Chain from the Perspective of Government Subsidy

Author

Listed:
  • Kailing Liu

    (School of Business and Management, Jilin University, Changchun 130022, China)

  • Quanxi Li

    (School of Business and Management, Jilin University, Changchun 130022, China)

  • Haowei Zhang

    (School of Business and Management, Jilin University, Changchun 130022, China)

Abstract

Efficient and low-cost remanufacturing can be achieved through process innovation. Consequently, the question of whether government subsidies for remanufacturing process innovation will stimulate improvement in this area and thus affect the closed-loop supply chain is worth discussing. To answer this question, we establish a closed-loop supply chain model consisting of a manufacturer and a retailer, taking into account both remanufacturing process innovation and government subsidy. This is done in order to explore the impact of remanufacturing process innovation on the closed-loop supply chain from the perspective of government subsidies. Moreover, the government subsidizes the manufacturer according to the improvement of remanufacturing process innovation levels. Specifically, we analyze the optimal decisions and the social welfare in two models—the benchmark model without government subsidy, and the government subsidy model. Our main findings are threefold. The optimal decisions of the two models vary with the proportion of new products’ production cost and remanufactured products’ production cost. The government subsidy for process innovation does not necessarily improve the profits of the manufacturer, the retailer, and the supply chain system. Moreover, there is a threshold; the government subsidy can hurt the retailer’s profits, and the retailer has no motivation to participate in the sale of new products when the government subsidy is below that threshold. The government subsidy for process innovation does improve overall social welfare and has a lesser environmental impact. The conclusions are also verified by numerical analysis.

Suggested Citation

  • Kailing Liu & Quanxi Li & Haowei Zhang, 2022. "Analysis of the Impact of Remanufacturing Process Innovation on Closed-Loop Supply Chain from the Perspective of Government Subsidy," Sustainability, MDPI, vol. 14(18), pages 1-25, September.
  • Handle: RePEc:gam:jsusta:v:14:y:2022:i:18:p:11333-:d:911182
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/2071-1050/14/18/11333/pdf
    Download Restriction: no

    File URL: https://www.mdpi.com/2071-1050/14/18/11333/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Pisano, Gary P., 1996. "Learning-before-doing in the development of new process technology," Research Policy, Elsevier, vol. 25(7), pages 1097-1119, October.
    2. Chenavaz, Régis, 2012. "Dynamic pricing, product and process innovation," European Journal of Operational Research, Elsevier, vol. 222(3), pages 553-557.
    3. Jie Gao & Xiong Wang & Qiuling Yang & Qin Zhong, 2016. "Pricing Decisions of a Dual-Channel Closed-Loop Supply Chain under Uncertain Demand of Indirect Channel," Mathematical Problems in Engineering, Hindawi, vol. 2016, pages 1-13, May.
    4. Li, Gendao & Reimann, Marc & Zhang, Weihua, 2018. "When remanufacturing meets product quality improvement: The impact of production cost," European Journal of Operational Research, Elsevier, vol. 271(3), pages 913-925.
    5. Dobson, Paul W. & Chakraborty, Ratula, 2020. "Strategic incentives for complementary producers to innovate for efficiency and support sustainability," International Journal of Production Economics, Elsevier, vol. 219(C), pages 431-439.
    6. Zheng, Xiao-Xue & Liu, Zhi & Li, Kevin W. & Huang, Jun & Chen, Ji, 2019. "Cooperative game approaches to coordinating a three-echelon closed-loop supply chain with fairness concerns," International Journal of Production Economics, Elsevier, vol. 212(C), pages 92-110.
    7. Zhen Li & Jiao Zhang & Qingfeng Meng & Wei Zheng & Jianguo Du, 2019. "Influence of Government Subsidy on Remanufacturing Decision under Different Market Models," Mathematical Problems in Engineering, Hindawi, vol. 2019, pages 1-16, July.
    8. Ni, Jian & Zhao, Jun & Chu, Lap Keung, 2021. "Supply contracting and process innovation in a dynamic supply chain with information asymmetry," European Journal of Operational Research, Elsevier, vol. 288(2), pages 552-562.
    9. He, Peng & He, Yong & Xu, Henry, 2019. "Channel structure and pricing in a dual-channel closed-loop supply chain with government subsidy," International Journal of Production Economics, Elsevier, vol. 213(C), pages 108-123.
    10. Benrong Zheng & Chao Yang & Jun Yang & Min Zhang, 2017. "Dual-channel closed loop supply chains: forward channel competition, power structures and coordination," International Journal of Production Research, Taylor & Francis Journals, vol. 55(12), pages 3510-3527, June.
    11. 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.
    12. Genc, Talat S. & De Giovanni, Pietro, 2020. "Closed-loop supply chain games with innovation-led lean programs and sustainability," International Journal of Production Economics, Elsevier, vol. 219(C), pages 440-456.
    13. Ron Adner & Daniel Levinthal, 2001. "Demand Heterogeneity and Technology Evolution: Implications for Product and Process Innovation," Management Science, INFORMS, vol. 47(5), pages 611-628, May.
    14. Liu, Zhi & Li, Kevin W. & Li, Bang-Yi & Huang, Jun & Tang, Juan, 2019. "Impact of product-design strategies on the operations of a closed-loop supply chain," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 124(C), pages 75-91.
    15. Hong, I-Hsuan & Yeh, Jun-Sheng, 2012. "Modeling closed-loop supply chains in the electronics industry: A retailer collection application," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 48(4), pages 817-829.
    16. Cherrafi, Anass & Garza-Reyes, Jose Arturo & Kumar, Vikas & Mishra, Nishikant & Ghobadian, Abby & Elfezazi, Said, 2018. "Lean, green practices and process innovation: A model for green supply chain performance," International Journal of Production Economics, Elsevier, vol. 206(C), pages 79-92.
    17. Wu, Xiaole & Zhou, Yu, 2019. "Buyer-specific versus uniform pricing in a closed-loop supply chain with third-party remanufacturing," European Journal of Operational Research, Elsevier, vol. 273(2), pages 548-560.
    18. Kleber, Rainer & Reimann, Marc & Souza, Gilvan C. & Zhang, Weihua, 2020. "Two-sided competition with vertical differentiation in both acquisition and sales in remanufacturing," European Journal of Operational Research, Elsevier, vol. 284(2), pages 572-587.
    19. Hu, Jing & Hu, Qiying & Xia, Yusen, 2019. "Who should invest in cost reduction in supply chains?," International Journal of Production Economics, Elsevier, vol. 207(C), pages 1-18.
    20. Shoude Li, 2018. "Dynamic control of a multiproduct monopolist firm’s product and process innovation," Journal of the Operational Research Society, Taylor & Francis Journals, vol. 69(5), pages 714-733, May.
    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. Yuqing Hu & Lijun Meng & Jingya Xue & Hongying Xia, 2023. "Authorization or Outsourcing: Considering the Contrast/Assimilation Effect and Network Externality of Remanufactured Products under Government Subsidy," Sustainability, MDPI, vol. 15(14), pages 1-27, July.
    2. Salma Taqi Ghulam & Hatem Abushammala, 2023. "Challenges and Opportunities in the Management of Electronic Waste and Its Impact on Human Health and Environment," Sustainability, MDPI, vol. 15(3), pages 1-22, January.

    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. 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.
    2. Chen, Yuyu & Li, Bangyi & Zhang, Guoqing & Bai, Qingguo, 2020. "Quantity and collection decisions of the remanufacturing enterprise under both the take-back and carbon emission capacity regulations," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 141(C).
    3. 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).
    4. Wang, Junbin & Zhang, Ting & Fan, Xiaojun, 2020. "Reverse channel design with a dominant retailer and upstream competition in emerging markets: Retailer- or manufacturer- collection?," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 137(C).
    5. 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).
    6. A. K. Gaula & J. K. Jha, 2024. "Pricing strategy with quality improvement in a dual collection channel closed-loop supply chain under return uncertainty," Operational Research, Springer, vol. 24(2), pages 1-40, June.
    7. Qi Wang & Kebing Chen & Shengbin Wang & Xiaogang Cao, 2022. "Optimal decisions in a closed-loop supply chain: fairness concerns, corporate social responsibility and information value," Annals of Operations Research, Springer, vol. 309(1), pages 277-304, February.
    8. Manyi Tan & Fei Pei & Li He & Hong Cheng & Shupeng Huang, 2023. "Optimal Decision-Making of Closed-Loop Supply Chains in E-Commerce Platform Considering Sales Cooperations under Environmental Effects and WEEE Regulations," IJERPH, MDPI, vol. 20(9), pages 1-28, May.
    9. Cheng, Fei & Chen, Tong & Chen, Qiao, 2022. "Cost-reducing strategy or emission-reducing strategy? The choice of low-carbon decisions under price threshold subsidy," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 157(C).
    10. Zhang, Ranran & Ma, Weimin & Si, Hongyun & Liu, Jinjin & Liao, Le, 2021. "Cooperative game analysis of coordination mechanisms under fairness concerns of a green retailer," Journal of Retailing and Consumer Services, Elsevier, vol. 59(C).
    11. Sungki Kim & Nina Shin & Sangwook Park, 2020. "Closed-Loop Supply Chain Coordination under a Reward–Penalty and a Manufacturer’s Subsidy Policy," Sustainability, MDPI, vol. 12(22), pages 1-28, November.
    12. Zheng, Xiao-Xue & Li, Deng-Feng & Liu, Zhi & Jia, Fu & Sheu, Jiuh-Biing, 2019. "Coordinating a closed-loop supply chain with fairness concerns through variable-weighted Shapley values," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 126(C), pages 227-253.
    13. Ge, Zehui & Hu, Qiying & Goh, Chon-Huat & Zhao, Rui, 2021. "Action-dependent commitment in vertical collaborations: The effect of demand-creating innovations in a supply chain," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 147(C).
    14. Benrong Zheng & Liang Jin & Guoxuan Huang & Jie Chu, 2023. "Retailer’s optimal CSR investment in closed-loop supply chains: the impacts of supply chain structure and channel power structure," 4OR, Springer, vol. 21(2), pages 301-327, June.
    15. Li, Sijie & Zheng, Bin & Jia, Dongfeng, 2024. "Optimal decisions for hybrid manufacturing and remanufacturing with trade-in program and carbon tax," Omega, Elsevier, vol. 124(C).
    16. Yong Liu & Zhen-juan Xia & Qian-qian Shi & Qian Xu, 2021. "Pricing and coordination of waste electrical and electronic equipment under third-party recycling in a closed-loop supply chain," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 23(8), pages 12077-12094, August.
    17. Zhou, Yongyi & Zhang, Yulin & Wahab, M.I.M. & Goh, Mark, 2023. "Channel leadership and performance for a closed-loop supply chain considering competition," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 175(C).
    18. Liu, Zhuojun & Chen, Jing & Diallo, Claver & Venkatadri, Uday, 2021. "Pricing and production decisions in a dual-channel closed-loop supply chain with (re)manufacturing," International Journal of Production Economics, Elsevier, vol. 232(C).
    19. Shen, Bin & Xu, Xiaoyan & Chan, Hau Ling & Choi, Tsan-Ming, 2021. "Collaborative innovation in supply chain systems: Value creation and leadership structure," International Journal of Production Economics, Elsevier, vol. 235(C).
    20. Zhang, Abraham & Wang, Jason X. & Farooque, Muhammad & Wang, Yulan & Choi, Tsan-Ming, 2021. "Multi-dimensional circular supply chain management: A comparative review of the state-of-the-art practices and research," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 155(C).

    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:jsusta:v:14:y:2022:i:18:p:11333-:d:911182. 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.