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Int. J. Environ. Res. Public Health 2017, 14(12), 1496; doi:10.3390/ijerph14121496

Incentive Policy Options for Product Remanufacturing: Subsidizing Donations or Resales?

1
School of Management Engineering, Nanjing University of Information Science Technology, Nanjing 210044, China
2
College of Economics and Management, Nanjing University of Aeronautics and Astronautics, Nanjing 210016, China
3
Odette School of Business, University of Windsor, Windsor, ON N9B 3P4, Canada
*
Author to whom correspondence should be addressed.
Received: 13 November 2017 / Revised: 27 November 2017 / Accepted: 27 November 2017 / Published: 1 December 2017
(This article belongs to the Special Issue Green Environment, Green Operations and Sustainability)
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Abstract

Remanufactured products offer better environmental benefits, and governments encourage manufacturers to remanufacture through various subsidy policies. This practice has shown that, in addition to product sales, remanufactured product can also achieve its value through social donation. Based on the remanufactured product value realization approaches, governments provide two kinds of incentive policies, which are remanufactured product sales subsidies and remanufactured product donation subsidies. This paper constructs a two-stage Stackelberg game model including a government and a manufacturer under two different policies, which can be solved by backward induction. By comparing the optimal decision of the two policies, our results show that, compared with the remanufacturing sales subsidy, donation subsidy weakens the cannibalization of remanufactured products for new products and increases the quantity of new products. It reduces the sales quantity of remanufactured products, but increases their total quantity. Under certain conditions of low subsidy, the manufacturer adopting sales subsidy provides better economic and environmental benefits. Under certain conditions of high subsidy, the manufacturer adopting donation subsidy offers better economic and environmental benefits. When untreated product environmental impact is large enough, donation subsidy policy has a better social welfare. Otherwise, the choice of social welfare of these two different policies depends on the social impact of remanufactured product donated. View Full-Text
Keywords: remanufacturing; government subsidy; donation; sales remanufacturing; government subsidy; donation; sales
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Zhu, X.; Wang, Z.; Wang, Y.; Li, B. Incentive Policy Options for Product Remanufacturing: Subsidizing Donations or Resales? Int. J. Environ. Res. Public Health 2017, 14, 1496.

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