Transfusions or hematopoiesis? How government subsidies and extended warranties feed decision-making about low-quality recycled used products in closed-loop supply chains

Abstract

PurposeThis paper studies how government subsidies (GS) and extended warranties (EW) feed decision-making about low-quality recycled used products (RUP) in closed-loop supply chains (CLSC).Design/methodology/approachThe authors use the Stackelberg game and numerical simulation to analyze how the quality of RUP affects decision-making about remanufacturing and EW.FindingsThe results show that (1) low-quality RUP will weaken the environmental and economic value of EW and harm the profits of the CLSC, and the retailer is more vulnerable to low-quality RUP than the manufacturer; (2) the participation of GS can weaken the negative impact of low-quality RUP on the CLSC, while the participation of EW cannot; (3) the participation of GS or EW can increase the recycling rate of used products and revenues of the CLSC; (4) the linkage of the two can further enhance the economic and environmental value of EW and significantly improve the resource utilization efficiency and benefits of the CLSC.Originality/valueThe authors study the impact of GS, EW and the linkage between the two on resource utilization and revenue of the CLSC.