Pricing strategies for remanufacturing with government incentives.

Government incentives play an important role in the development of the remanufacturing industry. It remains a challenge to determine an optimal policy (subsidy and/or tax refund) and how firms (manufacturers and retailers) can integrate it into their pricing decisions. We analyze the impacts of government financial incentives on manufacturers' and retailers' pricing decisions in terms of corporate profits and social welfare under different scenarios. We find that government incentives increase the recycling price and availability of used products, while the wholesale and retail prices of new products remain unchanged. Government incentives also significantly increase the manufacturer's profits and enhance social welfare. [ABSTRACT FROM AUTHOR]