Advertisement vs. Monetary Subsidy: Which is Better for Remanufacturing?

Abstract

The government subsidy plays an important role in the recycling and remanufacturing process of a closed-loop supply chain. This paper focuses on the impacts of different patterns of government subsidy on the chain members’ profits and the environment. Furthermore, we develop three models in a supply chain including a manufacturer, a retailer and a collector, namely (1) the government invests public service advertisement to stimulate the remanufacturing process (Model AS); (2) the government offers only monetary subsidy to the collector (Model MS); (3) the government allocates the subsidy into two parts, namely both advertisement and monetary subsidy (Model HS). We find that, no matter which subsidy pattern the government adopts, both the manufacturer and the collector are beneficiaries of the government subsidy, and that such subsidizing activity is definitely conducive to the environmental sustainability. Taking into account the chain members’ profits and the environmental impact, the optimal hybrid subsidy scheme (Model HS) is more beneficial than that in both Model MS and Model AS, which can be attributed to the combination of the incentives provided by the public service advertisement and the price attraction by the monetary subsidy. We also find that, for single advertisement and monetary subsidy, the amount of government subsidy will decide their merits and demerits. The direct monetary subsidy in Model MS will have a greater influence regarding to the supply quantity of used products than the mere advertisement subsidy in Model AS when the subsidy is relatively large.

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Acknowledgments

The authors sincerely thank the referees for their much practical help to improve the quality of this paper. This research has been supported by National Social Science Foundation of China under Grant No. 11&ZD165, Guangdong Planning Project of Philosophy and Social Science of China (No. GD19YGL18), the Startup Fund from Shenzhen University under Grant Nos. 2019023, 860-000002110361 and Natural Science Foundation of Hubei Province under Grant No. 2019CFB120.

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Correspondence to Yanting Huang or Benrong Zheng.

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Yanting Huang is an assistant professor in the College of Management at Shenzhen University in China. She received her Ph.D. degree from Huazhong University of Science and Technology, China. Her current research interests include supply chain management and operation management.

Benrong Zheng is an assistant professor in the College of Economics & Management at Huazhong Agricultural University in China. He received his Ph.D. degree from Huazhong University of Science and Technology, China. His current research interests include sustainable operations and retailing operations.

Zongjun Wang is a professor in School of Management at Huazhong University of Science and Technology in China. He received his PhD degree in Systems Engineering at Huazhong University of Science and Technology. His current research topics include risk management, business management, infrastructure systems and so on.

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Huang, Y., Zheng, B. & Wang, Z. Advertisement vs. Monetary Subsidy: Which is Better for Remanufacturing?. J. Syst. Sci. Syst. Eng. 29, 344–359 (2020). https://doi.org/10.1007/s11518-019-5447-3

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Keywords

  • Supply chain management
  • remanufacturing
  • government subsidy
  • environmental impact