Remanufacturing and promotion in dual-channel supply chains under cap-and-trade regulation

This paper investigates the issue of remanufacturing in a dual-channel supply chain. The manufacturer can produce/remanufacture the products and sell them at the same price through his own direct channel or a retail channel. Based on the cap-and-trade regulation, we construct two models with and without remanufacturing to obtain the optimal levels of carbon emission reduction and pricing strategies. The results indicate that remanufacturing can effectively improve the level of carbon emission reduction, and it is profitable to the manufacturer and the retailer. Furthermore, with remanufacturing, we investigate the effect of product promotion where the manufacturer can promote via direct channel (manufacturer's promotion), and the retailer can promote via retail channel (retailer's promotion). With the manufacturer's promotion, the results show that both the level of carbon emission reduction and profit of the manufacturer increase, but the retailer's profit decreases. On the other hand, the retailer's promotion can improve the profits of the retailer and the manufacturer when more consumers prefer the retail channel. Finally, we provide more managerial insights in the sensitivity analysis and extension parts. (C) 2018 Elsevier Ltd. All rights reserved.