Authorization or outsourcing? Investigating remanufacturing decisions under carbon trading policies and remanufacturing subsidies considering trade-in programs

With the introduction of carbon emission policies, subsidy policies, and the promotion of "trade-in" programs worldwide, determining the optimal remanufacturing strategy under various policy environments has become a critical issue. We develop six models to evaluate the effects of three policy combinations—carbon trading alone, carbon trading with consumer subsidies, and carbon trading with remanufacturer subsidies—under authorization and outsourcing remanufacturing strategies. The results show that dual policy of carbon emission trading and government subsidies more effectively promotes remanufacturing than a single carbon trading policy. When consumer subsidies reach a certain threshold, all supply chain members can achieve a win-win outcome, regardless of whether the remanufacturing strategy is authorization or outsourcing. The environmental cost is primarily influenced by carbon emissions from new products. If emissions are high, remanufacturer subsidies should be prioritized; if emissions are lower, consumer subsidies are more effective. Without subsidies, authorization has pricing advantages with low emissions, while outsourcing is more economical with high emissions or under market uncertainty. High carbon trading prices and subsidies increase overall supply chain profits but exhibit diminishing returns as excessive carbon prices increase corporate costs and reduce consumer surplus and social welfare. Moderate subsidies can mitigate these negative effects.