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Government Subsidy for Remanufacturing or Carbon Tax Rebate: Which Is Better for Firms and a Low-Carbon Economy

Author

Listed:
  • Tong Shu

    (Business School, Hunan University, Changsha 410082, China)

  • Zhizhen Peng

    (Business School, Hunan University, Changsha 410082, China)

  • Shou Chen

    (Business School, Hunan University, Changsha 410082, China)

  • Shouyang Wang

    (Business School, Hunan University, Changsha 410082, China
    Academy of Mathematics and System Science, Chinese Academy of Sciences, Beijing 100190, China)

  • Kin Keung Lai

    (International Business School, Shaanxi Normal University, Xi’an 710062, China
    Department of Industrial and Manufacturing Systems Engineering, Hong Kong University, Hong Kong, China
    College of Mangement, Xidian University, Xi’an 710126, China)

  • Honglin Yang

    (Business School, Hunan University, Changsha 410082, China)

Abstract

The government as a policy maker wishing to promote remanufacturing and proper disposal of hazardous old products which are harmful to environment has taken many actions, ranging from carbon regulation and financial incentives such as trade-in subsidy. However, carbon tax can result in loss of profit for firms to some degree, so the government has to give other subsidy to balance the profits and carbon emission. Thus, this article investigates two subsidy mechanisms: remanufacturing subsidy or tax rebate. The optimal pricing and production decision under these policies are examined. Our results show that carbon tax has a great impact on pricing strategies. Trade-in subsidy can encourage customers to replace their existing products with new and remanufactured products. Both remanufacture subsidy and tax rebate are beneficial to manufacturer and can further promote remanufacturing development.

Suggested Citation

  • Tong Shu & Zhizhen Peng & Shou Chen & Shouyang Wang & Kin Keung Lai & Honglin Yang, 2017. "Government Subsidy for Remanufacturing or Carbon Tax Rebate: Which Is Better for Firms and a Low-Carbon Economy," Sustainability, MDPI, vol. 9(1), pages 1-22, January.
    • Handle: RePEc:gam:jsusta:v:9:y:2017:i:1:p:156-:d:88512
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    References listed on IDEAS

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    Cited by:

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    5. Lijun Meng & Qiang Qiang & Zuqing Huang & Baoyou Zhang & Yuxiang Yang, 2020. "Optimal Pricing Strategy and Government Consumption Subsidy Policy in Closed-Loop Supply Chain with Third-Party Remanufacturer," Sustainability, MDPI, vol. 12(6), pages 1-29, March.
    6. Fan, Dian & Chen, Shaoqing, 2024. "No pain, no gain? Simulation of carbon reduction potential and socioeconomic effects of voluntary carbon trading in China during 2021–2060," Applied Energy, Elsevier, vol. 375(C).
    7. Xiaodong Zhu & Zhe Wang & Yue Wang & Bangyi Li, 2017. "Incentive Policy Options for Product Remanufacturing: Subsidizing Donations or Resales?," IJERPH, MDPI, vol. 14(12), pages 1-16, December.
    8. Fangfang Zhang & Hao Wang & Xiaoyu Wu, 2021. "The Impact of Government Subsidies on Single-Channel Recycling Based on Recycling Propaganda," Energies, MDPI, vol. 14(23), pages 1-14, December.
    9. Zhang, Yunrong & Hong, Zhaofu & Chen, Zhixiang & Glock, Christoph H., 2020. "Tax or subsidy? Design and selection of regulatory policies for remanufacturing," European Journal of Operational Research, Elsevier, vol. 287(3), pages 885-900.
    10. Jian Li & Kin Keung Lai, 2023. "The abatement contract for low-carbon demand in supply chain with single and multiple abatement mechanism under asymmetric information," Annals of Operations Research, Springer, vol. 324(1), pages 437-459, May.
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    15. Luan Santos & Rafael Garaffa & André F. P. Lucena & Alexandre Szklo, 2018. "Impacts of Carbon Pricing on Brazilian Industry: Domestic Vulnerability and International Trade Exposure," Sustainability, MDPI, vol. 10(7), pages 1-19, July.
    16. Tong Shu & Qian Liu & Shou Chen & Shouyang Wang & Kin Keung Lai, 2018. "Pricing Decisions of CSR Closed-Loop Supply Chains with Carbon Emission Constraints," Sustainability, MDPI, vol. 10(12), pages 1-25, November.
    17. Biao Li & Yong Geng & Xiqiang Xia & Dan Qiao & Hao Wang, 2021. "Comparatively Analyzing the Impact of Government Subsidy and Carbon Tax Policy on Authorized Remanufacturing," IJERPH, MDPI, vol. 18(16), pages 1-18, August.
    18. Tong Shu & Chunfen Huang & Shou Chen & Shouyang Wang & Kin Keung Lai, 2018. "Trade-Old-for-Remanufactured Closed-Loop Supply Chains with Carbon Tax and Government Subsidies," Sustainability, MDPI, vol. 10(11), pages 1-25, October.
    19. Weiling Wang & Yongjian Wang & Xiaoqing Zhang & Dalin Zhang, 2021. "Effects of Government Subsidies on Production and Emissions Reduction Decisions under Carbon Tax Regulation and Consumer Low-Carbon Awareness," IJERPH, MDPI, vol. 18(20), pages 1-17, October.
    20. Lixia Chen & Jianyuan Huang, 2023. "Study on the Interaction Effect between the Intensity of Government Low-Carbon Subsidies and the Growth Ability of Green and Low-Carbon Emerging Enterprises," IJERPH, MDPI, vol. 20(3), pages 1-17, January.

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