Pricing strategies for remanufacturing with government incentives

• Published in: Neural computing & applications 2024-02, Vol.36 (5), p.2187-2200
• Main Authors: Hao, Hui, Ran, Gang, Liu, Hui-min, Han, Henry, Gu, Qiannong
• Format: Article
• Language: English
• Subjects: Artificial Intelligence; Circular economy; Computational Biology/Bioinformatics; Computational Science and Engineering; Computer Science; Cooperation; Data Mining and Knowledge Discovery; Decision analysis; Decision making; Economic development; Environmental impact; Government subsidies; Image Processing and Computer Vision; Incentives; Management decisions; Manufacturers; Manufacturing; Pricing; Probability and Statistics in Computer Science; Product development; Profits; Remanufacturing; Retail stores; S.I.: Machine Learning and Big Data Analytics for IoT Security and Privacy (SPIoT 2022); Special Issue on Machine Learning and Big Data Analytics for IoT Security and Privacy (SPIoT 2022); Supply chains; Tax refunds; Taxation; VAT; Waste materials
• ISSN: 0941-0643; 1433-3058
• DOI: 10.1007/s00521-023-08804-6

Government incentives play an important role in the development of the remanufacturing industry. It remains a challenge to determine an optimal policy (subsidy and/or tax refund) and how firms (manufacturers and retailers) can integrate it into their pricing decisions. We analyze the impacts of government financial incentives on manufacturers’ and retailers’ pricing decisions in terms of corporate profits and social welfare under different scenarios. We find that government incentives increase the recycling price and availability of used products, while the wholesale and retail prices of new products remain unchanged. Government incentives also significantly increase the manufacturer’s profits and enhance social welfare.