In this paper, we consider the choice of remanufacturing strategy of a monopolist original equipment manufacturer under the cap-and-trade regulation in the presence of the assimilation effect. We model the manufacturer’s optimal decision-makings and associated profits under three different remanufacturing strategies. Our results indicate that the assimilation effect reduces the manufacturer’s motivation to become engaged in remanufacturing. Specifically, there exists a threshold for the intensity of the assimilation effect for the manufacturer to enter remanufacturing. First, when the assimilation effect is below the threshold, the manufacturer should choose to remanufacture. Otherwise, the manufacturer should only produce new products. Second, the value of the threshold for the assimilation effect is further determined by the remanufacturing’s emission advantage and the carbon trading price. In addition, when the intensity of the assimilation effect is high enough, the carbon trading price and carbon emission advantage no longer impacts the remanufacturing strategy. Lastly, our numerical examples reveal that ignoring the assimilation effect can lead to up to 56.2% loss of potential profit for the manufacturer.

In this study, we consider robust emission reduction strategies for a monopolistic manufacturer facing demand uncertainty under governments’ cap-and-trade regulations. We model the manufacturer’s decision making and associated profits under four different emission reduction strategies: no mitigation measure, undertaking remanufacturing, improving the greening level, and both remanufacturing and improving the greening level. We find that the cap-and-trade regulation enhances the manufacturer’s motivation to be engaged in reducing carbon emissions. Furthermore, the manufacturer’s optimal choice of emissions reduction strategy depends on the level of carbon trading price and the degree of demand uncertainty. Specifically, there exists a threshold of carbon trading price at which the manufacturer’s optimal emissions reduction strategy will change. When the carbon trading price is low (below the threshold), the best strategy for the manufacturer to reduce emissions is to improve the greening level of the products. When the carbon trading price is high (above the threshold), the manufacturer should consider both remanufacturing and improving the greening level. Moreover, the threshold of the carbon trading price is further impacted by the demand uncertainty. With market demand uncertainty rising, the threshold of carbon trading price increases as well. Finally, we find raising the carbon trading price may not necessarily benefit the environment. Overpriced carbon trading may hurt the manufacturer’s production instead of encouraging them to take emission reduction measures.

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In this paper, we investigate the government’s optimal subsidy strategy for the China–Europe Railway Express (CERE) considering environmental impacts and industry competition. Specifically, we consider three subsidy options: no subsidies, subsidies to CERE carriers, and subsidies to shippers. A game theory framework is developed to analyze the problem of developing a sustainable supply chain consisting of the government, competitive carriers, and shippers. First of all, we find that for the government, indirect subsidies to CERE carriers and direct subsidies to shippers lead to the same total social welfare. We then examine the conditions for phasing out government subsidies. Our results indicate that the government’s optimal subsidy strategy switches at a threshold level of CERE’s environmental advantage. In particular, when the environmental advantage of CERE is high, the government should subsidize CERE by subsidizing either the carrier or shipper. In contrast, when the environmental advantage of CERE is low, the government should opt out of subsidies. At last, we find that this threshold of CERE’s environmental advantage is further impacted by CERE’s capacity and marginal operating costs. This study differs from prior research by investigating various subsidy strategies while taking into account CERE’s emission advantage and the timing of subsidy withdrawal.