Pricing and channel selection decisions for new and remanufactured products under carbon emission reward-penalty

Under carbon emission reward-penalty mechanism, three distribution channel structure models are constructed in this paper. Under each channel structure, a manufacturer sells new and remanufactured products separately, including selling new and remanufactured products through the independent retailer or the third-party platform (Structure MRP); selling new product through the retailer and setting up a direct channel to sell remanufactured product (Structure MR); selling remanufactured product through the third-party platform and setting up a direct channel to sell new product (Structure MP). Further, the impacts of the carbon emission reward-penalty coefficient on the pricing decisions as well as the optimal channel selection strategies are explored through theoretical and numerical analysis. The results show that when consumers’ willingness-to-pay for the remanufactured product is high, applying carbon emission reward-penalty mechanism can expand the market share of the remanufactured products and promote remanufacturing. The setup cost of the direct channel and the carbon emission reward-penalty coefficient will affect the channel selection strategies significantly. Specifically, a higher setup cost of direct channel leads to the manufacturer to choose the MRP structure. When the setup cost is small, the increase of carbon emission reward-penalty will lead the manufacturer to shift the optimal channel selection from MP to MR. In addition, the total environment impact in MP structure is the largest and the consumer surplus in MRP structure is the lowest. When the manufacturer chooses between MR and MP structure, it is possible to achieve a win-win situation for both the manufacturer and consumers if the government sets lower or higher carbon emission reward-penalty coefficient. Finally, this paper extends the model to consider outsourcing remanufacturing and platform selling mode, and investigates the differences and commonalities of the manufacturer’s channel selection strategies. © 2023 Systems Engineering Society of China. All rights reserved.