PRICING STRATEGIES FOR HYBRID REMANUFACTURING SYSTEMS WITH CONSIDERATION OF CARBON EMISSION AND CONSUMER HETEROGENEITY

Abstract

In the past, firms merely considered economic benefits to maximize their own profit. However, as climate change and the greenhouse effects have become more and more serious, not only firms do gradually take the initiative in dealing with the environmental issues but also the governments make relevant environmental policies to control the carbon emissions. Therefore, managers currently should consider both their benefits and the environmental regulations when making decisions. Firms have to change their business models and reduce carbon emissions to create a win-win situation where both the environment and the economy are maximized. Therefore, remanufacturing has become one of the most important issues for enterprises.

This study investigates the impacts that carbon emission policies and consumer characteristics have on the hybrid-remanufacturing system in which the carbon emissions of new and remanufactured products during the two-periods production are considered, and the carbon emission policies are categorized into three types: (1) carbon tax policy, (2) carbon trading policy, and (3) carbon penalty policy. In considering the carbon reduction effect, high and low carbon-reduction levels are considered, and the corresponding optimal prices of new and remanufactured products are obtained respectively. Comparative analysis among policies is performed and the result shows that with a high degree of carbon abatement for remanufactured products, the carbon penalty policy is preferred. However, with a low degree of carbon abatement, the carbon trading policy is preferred. Moreover, among all factors, the efficiency of carbon abatement has the most influence on the carbon emission while the carbon penalty and trading policies.

Index Terms—Carbon emission policy, Hybrid remanufacturing system, Carbon reduction effect of remanufactured products, Consumer preference.