The impacts of subsidy strategies and recycling modes on the closed-loop supply chain

This paper explored the effect of government subsidies and recycling modes on a four-echelon closed-loop supply chain (CLSC) including a government, a manufacturer, a retailer, and a third-party recycler. The government directly subsidizes remanufacturing activities, recycling activities, or consumption activities with social welfare maximization objective. Meanwhile, the used products can be recycled by the retail, the third party, or both. We developed nine Stackelberg game models and derived the optimal decision and the equilibrium revenue of all members. Then, the optimal subsidy intensity, retail price, and wholesale price under different scenarios were compared theoretically. Finally, we analyzed the sensitivity of all stakeholders' optimal decisions and revenue to important parameters. Some novel and meaningful conclusions were established: (a) Government directly subsidy for remanufacturing has the same effect as subsidy for recycling; (b) it is better for the government directly subside manufacturing when two recyclers participate under the uncertainty of manufacturing cost or potential market; (c) all members should intervene the recycling cost coefficient, the costs saved of remanufacturing unit used product, and the price elasticity coefficient; (d) it is a conservative and effective strategy for the government to directly subside consumption activities.