Effects of the Carbon Credit Policy on the Capital-Constrained Manufacturer’s Remanufacturing and Emissions Decisions
Abstract
:1. Introduction
2. Literature Review
3. Materials and Methods
3.1. Problem Description and Notations
3.2. Assumptions
3.3. Research Methods
4. Model Formulation and Analysis
4.1. Model N Availability of Preferential Interest Rate under No Carbon Threshold
4.2. Model Y Availability of Preferential Interest Rate under a Mandatory Carbon Threshold
4.3. Effects on Consumer Surplus
5. The Bank’s Optimal Decision
6. Conclusions
- (1)
- Under the carbon credit policy, an excessively high carbon threshold will not be conducive to promoting the capital-constrained manufacturer to carry out remanufacturing activities and controlling total carbon emissions. When the carbon threshold can play a mandatory restraining role, the capital-constrained manufacturer’s optimal operational strategies are closely related to the carbon threshold and the preferential interest rate for loans, etc. Furthermore, no matter how the manufacturer adjusts its production strategies, total carbon emissions will always be equal to the carbon threshold to achieve profit maximization.
- (2)
- Under the carbon credit policy, when the carbon savings level of remanufactured products is high enough, the declining carbon threshold or the rising preferential interest rate for loans will increase the production quantity of remanufactured products and decrease the production quantity of new products. This also means that, at this time, the carbon credit policy can achieve both an increase in remanufacturing quantity and a reduction in total carbon emissions. Meanwhile, the declining financing cost will induce the manufacturer to benefit consumers by lowering the sales prices of new and remanufactured products.
- (3)
- Under the carbon credit policy, the optimal preferential interest rate for loans is inversely correlated with the carbon threshold. When the carbon threshold remains unchanged, the increase in consumers’ willingness to pay for remanufactured products can better guide the bank to provide a higher preferential interest rate if the carbon savings level of remanufactured products is low. Furthermore, if the carbon savings level of remanufactured products is too high, the further improvement in the carbon savings level (i.e., a decrease in β) can better guide the bank to provide a higher preferential interest rate, thereby providing better financial services to promote manufacturers’ remanufacturing activities. Ultimately, on the premise that the total carbon emissions remain unchanged, a higher preferential interest rate encourages more or a larger range of remanufacturing activities by manufacturers while the bank achieves profit maximization.
Author Contributions
Funding
Institutional Review Board Statement
Informed Consent Statement
Data Availability Statement
Conflicts of Interest
Appendix A
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Decision Variables | Descriptions |
qn, qr | Manufacturing/Remanufacturing quantities |
rp | Preferential interest rate for loans |
Relevant parameters | Descriptions |
pn, pr | Sales price per unit of new and remanufactured products, pn > pr |
cn, cr | Production cost per unit of new and remanufactured products, cn > cr |
δ | Consumers’ willingness to pay for remanufactured products, 0 < δ < 1 |
en | Carbon emissions of unit of new product |
β | The percentage of carbon emissions per unit of remanufactured product to unit of new product, 0 < β < 1 |
Ê | Carbon threshold |
r0 | General interest rate for loans |
πm | Manufacturer’s total profit |
Em | Manufacturer’s total carbon emissions |
πc | Consumer surplus |
πb | Bank’s total profit |
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Wang, Y.; Wang, F.; Li, W. Effects of the Carbon Credit Policy on the Capital-Constrained Manufacturer’s Remanufacturing and Emissions Decisions. Int. J. Environ. Res. Public Health 2023, 20, 4352. https://doi.org/10.3390/ijerph20054352
Wang Y, Wang F, Li W. Effects of the Carbon Credit Policy on the Capital-Constrained Manufacturer’s Remanufacturing and Emissions Decisions. International Journal of Environmental Research and Public Health. 2023; 20(5):4352. https://doi.org/10.3390/ijerph20054352
Chicago/Turabian StyleWang, Yongjian, Fei Wang, and Wenbo Li. 2023. "Effects of the Carbon Credit Policy on the Capital-Constrained Manufacturer’s Remanufacturing and Emissions Decisions" International Journal of Environmental Research and Public Health 20, no. 5: 4352. https://doi.org/10.3390/ijerph20054352
APA StyleWang, Y., Wang, F., & Li, W. (2023). Effects of the Carbon Credit Policy on the Capital-Constrained Manufacturer’s Remanufacturing and Emissions Decisions. International Journal of Environmental Research and Public Health, 20(5), 4352. https://doi.org/10.3390/ijerph20054352