Collecting mode selection in a remanufacturing supply chain under cap-and-trade regulation

Abstract This paper investigates a remanufacturing closed-loop supply chain under the cap-and-trade regulation, where the collecting operations can be carried out by a manufacturer or a retailer or a third party. We construct models with and without remanufacturing to show the value of remanufacturing. The results indicate that remanufacturing can effectively improve the level of carbon emission reduction and the profits of the manufacturer and the retailer. For models with remanufacturing, we find that, interestingly, the result in the previous literature does not always hold. Specifically, the manufacturer will choose the third-party collecting mode when the unit carbon emissions in take-back process in the retailer collecting mode are much larger than those in the third-party collecting mode and the unit cost savings are relatively low, otherwise the manufacturer will choose the retailer collecting mode. As the numerical analysis shown, when the manufacturer subjects to a stringent emission control, total carbon emissions are always the lowest in the third-party collecting mode. The manufacturer's optimal collecting mode, whether is the retailer collecting mode or the third-party collecting mode, may result in the most carbon emissions when the carbon price is relatively low or the carbon intensity is high.