Optimal Decisions in a Multi-Party Closed-Loop Supply Chain Considering Green Marketing and Carbon Tax Policy

Abstract

Global warming and e-waste pollution are two major environmental pollution issues that have attracted widespread attention. The government has adopted various measures to reduce carbon emissions from businesses and to make manufacturers responsible for recycling e-waste. In the face of external pressures, more and more companies are implementing sustainable closed-loop supply chain (CLSC) management to reduce environmental pollution and achieve sustainable development. Therefore, it is essential to study the operational decisions of CLSC enterprises. This paper considers a sustainable CLSC consisting of two competing manufacturers and a dominant retailer. The government imposes a carbon tax on the retailer, and two manufacturers collect used products directly from their customers. We separately examine whether implementing green marketing by the retailer and the collaboration between the two manufacturers can improve their profits. By building decentralized CLSC mathematical models and applying game theory methods, we obtain that green marketing can increase profits for all CLSC members and improve return rates. The collaboration may yield higher total profits for two manufacturers than a decentralized solution, while the retailer’s profits may be lost under certain conditions. Finally, we perform several numerical analyses to find the relationship between unit carbon emission tax and social welfare and gain some managerial insights. The study gives key factors that CLSC companies should consider when making decisions to help them achieve sustainability and provides recommendations for the government to set a reasonable unit carbon tax.