Government regulation and enterprise decision in China remanufacturing industry: evidence from evolutionary game theory
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ORIGINAL ARTICLE
Government regulation and enterprise decision in China remanufacturing industry: evidence from evolutionary game theory Xihui Chen1 1 2
•
Jian Cao1 • Sanjay Kumar2
School of Management, Zhejiang University of Technology, Hangzhou 310023, China College of Business, Valparaiso University, Valparaiso 46383, USA
Received: 9 August 2020 / Revised: 18 September 2020 / Accepted: 13 October 2020 The Joint Center on Global Change and Earth System Science of the University of Maryland and Beijing Normal University 2020
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. Keywords Government regulation Green decision Evolutionary game Game theory Circular economy
& Xihui Chen [email protected]
1 Introduction Remanufacturing is able to bring environmental and economic benefits to every country. Regarded as the environmentally friendly industry, remanufacturing now has gradually received intense attentions from the researchers and government agencies. In response to the resource shortages, excessive energy consumption as well as the environmental degradation, remanufacturing provides a viable option for managing the increase in the number of scrapped products worldwide (Kelly et al. 2017; Cao et al. 2020). Through a series of industrial procedures that may include inspection, dismantling, repair, and testing, remanufacturing can restore the used product to the same capacity as the new products (Gagnon and Morgan 2014; Sofia et al. 2017). Comparing with the usage of the ‘‘new’’ components for production, remanufactured products can al
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