Optimizing Remanufacturing under Blockchain and Voluntary Carbon Markets: R&D Incentives and Supply Chain Coordination

Abstract This paper explores the effect of blockchain technology and voluntary emission reduction markets (VERM) on the remanufacturing supply chain decision, environmental performance, and coordination mechanism. Using a game-theoretic model of a new product manufacturer and an independent remanufacturer, we examine outsourcing and authorization with VERM and analyze the impacts of different research and development leadership types and a coordination mechanism using cost-sharing and two-part tariff contracts. Our results show that while VERM can boost remanufacturing output and benefit both sides, the outcomes really depend on things like governance setup, how much is spent on investments, and how carbon credit revenue is split. In this case, an outsourced remanufacturer can have a higher output than an authorized one and achieve a higher emission reduction effort per unit remanufactured product than an authorized one, but neither has a dominant advantage: consumer acceptance and VER prices may be threshold-dependent factors affecting corporate profits and emission reductions. Counterintuitively, higher VER prices do not necessarily reduce overall emissions, and excessive incentives may lead to off-target over-remanufacturing when remanufacturing is more carbon-intensive. The proposed coordination contracts coordinate the incentives of two decentralized decision makers towards the center target when the decision conditions (the feasibility constraints and the participation constraints) are fulfilled. The results may be used to shed light on links between blockchain-enabled digital certification, carbon credit incentives, and contractual design for reducing economic and environmental costs.