Production and emissions reduction decisions considering the differentiated carbon tax regulation across new and remanufactured products and consumer preference

The traditional carbon tax always causes the inequalities, and thus a differentiated carbon tax regulation across new and remanufactured products is introduced in this paper. To explore effects of the differentiated carbon tax on production and emissions reduction decisions, the environment and social welfare, this paper formulates a profit maximization model and presents some theoretical analysis and numerical analysis. The study results show that: (1) Under the differentiated carbon tax regulation, whether the rising base carbon tax rate is conducive to remanufacturing activities mainly depends on emissions advantages in remanufacturing, but a lower tax rate for remanufactured products would always promote remanufacturing activities. (2) A higher base carbon tax rate would improve the emissions reduction investment level when the emissions reduction effectiveness in remanufacturing is also better, and it is always beneficial to the environment. However, a lower tax rate for remanufactured products may decrease the emissions reduction investment level, and whether it could reduce total carbon emissions depends on emissions advantages in remanufacturing. (3) The higher the base carbon tax rate is, the lower the social welfare when the environmental damage coefficient is small, but a lower tax rate for remanufactured products would be always beneficial to social welfare.