Impact of environmental taxes on remanufacturing decisions of a duopoly

Abstract

Remanufacturing can exert positive economic and environmental effects, but factors such as competition and governmental regulations influence its development. In this paper, we investigated the impact of environmental taxes on manufacturers’ production decisions in three cases of a duopoly, in which remanufacturing was not conducted or conducted by one or two of the manufacturers. Based on game theory, the firm’s remanufacturing decision was discussed in cases when only one manufacturer was capable of remanufacturing and both were capable of remanufacturing. Analysis results showed that the benefits from the remanufacturing production cost and competition were the most critical trade-off components. We further analyzed how manufacturers’ decisions affected the environment. The environmental impact was measured by the total emissions, and relevant advice was provided to the regulator. Finally, assessments of numerical examples were performed using assumed values of the parameters to verify our results without loss of generality.