Research on Closed-Loop Supply Chain Decision Making and Recycling Channel Selection under Carbon Allowance and Carbon Trading

Abstract

The massive emission of carbon dioxide and other greenhouse gases has begun to threaten the survival of human beings and the balance of the Earth’s ecology. If carbon emission is left unchecked, we will face terrible consequences. Closed-loop supply chain operation is an effective way to improve economic and environmental benefits at the same time. This paper attempts to study the decision-making and recycling channel selection of CLSC under carbon allowance and carbon trading policies. This paper constructs a closed-loop supply chain consisting of a manufacturer, a retailer and a third-party recycler, and uses the Stackelberg game-theoretic method to decide variables such as the product price and recycling rate of CLSC under three recycling models. Through the analysis and comparison of the manufacturer’s profit of and the carbon emissions in different models, the following conclusions are drawn. (1) When the manufacturer recycles WEEE, the supply chain obtains the most profit. (2) When the retailer recycles WEEE, the carbon emissions of the supply chain are lowest. (3) The manufacturer tends to choose the M model, which is the manufacturer recycling model. The T model and the R model have little difference in carbon emissions. For easier management, the government prefers to choose the T model, which is the third-party recycler recycling model.