A Trade-in Closed-Loop Supply Chain Considering Carbon Cap-and-Trade Policy

Many companies today are seeking to implement closed-loop supply chains and remanufacturing activities to save costs and protect the environment. At the same time, China is actively promoting trade-in polices and optimizing carbon emission reduction policies, aiming at green economy development. This paper considers a closed-loop supply chain with trade-in service and remanufacturing considering carbon cap-and-trade policy. The analysis offers models for comparing regimes with or without a government trade-in subsidy. This paper examines how various parameters, including customer profiles, product residual value, reuse profit, environmental benefit, carbon price, and government subsidy, influence the optimal strategy and profits of the close-loop supply chain. Results show that the positive impact of product resale value and reuse profit on trade-in rebate. These findings indicate, although the benefits of a lower remanufacturing cost and reduced emissions increase the price at which they are offered for sale, this leads to reduced purchases by original purchasers, and greater demand for replacements. Higher carbon price has the potential to the price schedule consists of wholesale price, retail price, and trade-in rebate, it discourages new consumer sales and has mixed influences on replacement consumer sales, possibly increasing or decreasing these transactions. Government subsidy reduces first-time purchases, yet increase the trade-in purchases. As the subsidy decreases, profit of the manufacture increases and that of the retailer declines. On the other hand, increased subsidy results in lower manufacture profits and higher retailer profits.