Government regulation and enterprise decision in China remanufacturing industry: evidence from evolutionary game theory

Abstract

Currently, the large-scale industrial production has made mountains of scrapped products and inevitably exerts irreversible damage to the nature resource and environment. Under this real situation, remanufacturing industry is able to provide a new path for government and enterprises to deal with the scrapped products and find the new growth point of ecological economy. So, the problem that how to push forward the development of remanufacturing via the regulations of government has become the focus to the scholars and practitioners of enterprises. In this paper, the evolutionary game model was established in order to analyze the optimal strategies for both the government and the enterprises. Based on the obtained results from evolutionary game model, it shows that when the revenues gotten from supervision activities surpass the costs, government will supervise enterprises’ production pattern positively. Meanwhile, if the profits earned by polluted production are higher than it in remanufacturing production, enterprises will keep their patter of production, although they may face the penalties of government. Then, a case study based on the long-term perspective was introduced in order to verify the rationality of the game model in math. The result of this paper shows that the regulation of government will exert the significant influences to firms’ decision about remanufacturing. During the different periods of remanufacturing industry development, government regulations will make different influences.

Research on an Enterprise Remanufacturing Strategy Based on Government Intervention

“…We set the basic parameters as follows: c M,n = 0.99, c M,r = 0.35, w = 0.35, δ = 0.68, ϕ = 2, k = 0.2, ξ = 0.78, d = 1, τ 0 = 0.3, η = 0.04, z 1 = 1.5, z 2 = 0.7, Q = 2.5, A = 0.05 The basis for setting the basic parameters came from actual data accumulated by Chinese remanufacturing companies that we visited and interviewed and the academic results of related papers. For example, based on the results of our field research and the research results of Chen, Cao, and Kumar [41], we found that in the current development stage of the Chinese remanufacturing industry, the cost of remanufactured products is 30-40% of the cost of new products. We assigned the unit costs for new products and remanufactured products for manufacturers as follows: c M,n = 0.99, c M,r = 0.35.…”

“…companies that we visited and interviewed and the academic results of related papers. For example, based on the results of our field research and the research results of Chen, Cao, and Kumar [41], we found that in the current development stage of the Chinese remanufacturing industry, the cost of remanufactured products is 30-40% of the cost of new products. We assigned the unit costs for new products and remanufactured products for manufacturers as follows:…”

The mediating role of functionality orientation for purchasing remanufactured products: Cases in China, Indonesia, and Thailand

“…The reason that the governance indicators are important is that consumers’ uncertainty about the quality of RMPs due to poor regulation, relaxed laws, and government ineffectiveness can hamper their purchasing decisions. Effective governments understand how to move remanufacturing forward through government regulations (Chen et al., 2021). Different levels of governance indicators across Asian countries, such as those presented in Table 2, may affect consumer attitudes toward RMPs.…”

“…The first Remanufactured Products Catalogue was issued in 2011, and the eighth catalog was issued in 2019. In 2013, the Ministry of Industry and Information Technology initiated the Swap the Old for Remanufactured Products program (Chen et al., 2021), under which consumers are subsidized when they buy remanufactured parts and return used assemblies ("cores") to the remanufacturers. In 2017, the Ministry of Industry and Information Technology issued its High‐End Smart Remanufacturing Plan (2018–2020) (Xu et al., 2017).…”

Research on the Evolution Path and Influence Factors of Core Enterprise Oriented Entrepreneurship Ecosystem Under the Government Regulation

“…They found that when the revenue of the government supervision exceeds the cost, the government will actively supervise the enterprise. When the profit of polluting production is higher than that of the remanufacturing production, even facing the government's punishment, the enterprise will choose polluting production [25]. In general, in the relevant researches of evolutionary game, the initial intention, benefit, cost, punishment and other factors influence the strategy selection of the participants, but specific analysis of the direction and degree of the influence of different factors on the strategy selection of the participants is relatively less.…”