CARBON ABATEMENT AND RECYCLING DECISIONS IN CLOSED-LOOP SUPPLY CHAIN WITH THE REWARD-PENALTY MECHANISMS

. Under the social pressure of green and sustainable development, the manufacturer is getting involved in carbon abatement and used-product recycling activities at the same time. Meanwhile, the government can incentivize firms to participate in the low-carbon production and end-of-life products management through regulations. We study the decisions of carbon abatement and used-product recycling in a closed-loop supply chain, in which the government's reward-penalty mechanisms of carbon emission and the return rate are implemented for the manufacturer and the collector, respectively. Four recycling decision models are formulated: (1) centralized system (Model C); (2) the manufacturer recycling (Model M); (3) the retailer recycling (Model R); (4) the third-party recycling (Model 3P). Equilibrium solutions among different models are compared and analyzed. Findings show that Model 3P is less desirable since the carbon abatement level, return rate, supply chain profits, and social surplus are the lowest in Model 3P, while Model M or Model R is more desirable depending on the parameter conditions. The carbon abatement level increases with the return rate, whereas the return rate decreases with the initial carbon emission. Moreover, when the initial carbon emission is low, the carbon abatement level and the return rate can be improved by the government intervention via reward-penalty mechanisms.