Manufacturer’s Channel Selection Considering Carbon Emission Reduction and Remanufacturing

Abstract

This paper develops manufacturer’s channel selection models considering carbon emission reduction and remanufacturing. The models are based on the cap-and-trade system and consumer’s preference for low-carbon product. We study the strategies of pricing and carbon emission reduction under three channel structures: pure online channel, pure offline channel and dual channel. The results show that a higher recovery rate of remanufacturing can bring a higher reduction in carbon emission level and a lower price for consumers in the three channel structures. Compared to the pure online channel and pure offline channel, the dual channel is the optimal selection for a for-profit manufacturer. However, for a retailer, the pure offline channel is more profitable than the dual channel. From the perspective of carbon emission reduction, the dual channel and the pure online channel generate the same effect; the pure offline channel makes the highest reduction in carbon emission when consumers’ acceptance for online channel is low. More managerial insights are provided in sensitivity analysis.

Keywords

Channel structure / emission reduction / low-carbon preference / remanufacturing

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