Decisions on Remanufacturing with WTP Disparity and Recycling Competition under Government Subsidies

Enterprises have assigned increasing importance to remanufacturing, and meanwhile, the competitiveness of remanufacturing has also become established. In this article, game theory is exploited and government subsidies for remanufacturing, consumer willingness to pay and recycling competition are considered, with a focus on a supply chain consisting of one local manufacturer and one nonlocal remanufacturer. This study attempts to investigate how nonlocal remanufacturers and local manufacturers determine whether they recycle used products and engage in remanufacturing when these factors are considered, in the hope that the results can be constructive in terms of policies and management related to enterprises and governments. As such, four situations are considered and the corresponding models are built to derive the optimal production of each enterprise in the four different situations. Numerical results under the four situations are furthercompared. The results show that consumer acceptance of remanufactured products, irrespective of whether there is competition in production and recycling of remanufactured products and whetherthe government provides subsidy for remanufacturing directly affects each enterprise, remanufacturing and the profits of the overall supply chains. Based on these factors, enterprises should adjust strategies and choose to compete or stop competing or monopolize the market. The government should define attitudes towards the market competition and supervise the changes of market competitiveness based onmarket competition and consumer acceptance of remanufactured products. This study can provide some constructive guidance for some potential nonlocal enterprises engaged in remanufacturing, and at the same time shed some light for desirable direction in some further research onremanufacturing in theory and practice.