Please use this identifier to cite or link to this item: https://hdl.handle.net/10356/145718
Title: Analyzing the effect of government subsidy on the development of the remanufacturing industry
Authors: Zhou, Qin
Yuen, Kum Fai
Keywords: Engineering::Civil engineering
Issue Date: 2020
Source: Zhou, Q., & Yuen, K. F. (2020). Analyzing the effect of government subsidy on the development of the remanufacturing industry. International Journal of Environmental Research and Public Health, 17(10), 3550-. doi:10.3390/ijerph17103550
Journal: International Journal of Environmental Research and Public Health
Abstract: Remanufacturing plays an important role in a circular economy, by shifting supply chains from linear to closed loop. However, the development of the remanufacturing industry faces many challenges. Consumers’ uncertainty about the quality of remanufactured products can hamper their decision to make a purchase (i.e., uncertainty behavior). Such uncertainty can be reduced when they learn that more consumers are purchasing remanufactured products (i.e., network externality behavior). Considering the aforementioned behaviors, this paper investigates how a government could set the optimal subsidy level to maximize the sales quantity of remanufactured products with a limited budget. We modeled a Stackelberg game between the government and an original equipment manufacturer, under two settings, over two periods. Setting 1 only considers an original equipment manufacturer that produces remanufactured products, and Setting 2 considers an original equipment manufacturer that produces both new and remanufactured products. We show that the original equipment manufacturer should adjust its pricing strategy (i.e., markup vs. markdown) according to the subsidy levels. Our analysis on the government budget constraint shows that an original equipment manufacturer earns more profits in Setting 1 than Setting 2, only when the budget constraint is high, and less profits when budget constraint is low.
URI: https://hdl.handle.net/10356/145718
ISSN: 1661-7827
DOI: 10.3390/ijerph17103550
Rights: © 2020 The Authors. Licensee MDPI, Basel, Switzerland. This article is an open access article distributed under the terms and conditions of the Creative Commons Attribution (CC BY) license (http://creativecommons.org/licenses/by/4.0/).
Fulltext Permission: open
Fulltext Availability: With Fulltext
Appears in Collections:CEE Journal Articles

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