IDEAS home Printed from https://ideas.repec.org/a/eee/proeco/v280y2025ics0925527324003347.html
   My bibliography  Save this article

Decision and coordination of WEEE closed-loop supply chain with risk aversion under the cap-and-trade regulation

Author

Listed:
  • Zhou, Fuli
  • Zhang, Chenchen
  • Tiwari, Sunil
  • Huang, Xingjun
  • Pratap, Saurabh

Abstract

Driven by the soaring consumption of electrical and electronic equipment (EEE), the semiconductor industry is facing sustainable development challenges such as energy management and carbon emissions. The waste electrical and electronic equipment (WEEE) management practice could contribute to achieving sustainability in the semiconductor industry through the remanufacturing business. Considering the collection quality heterogeneity and its potential influences on the WEEE remanufacturing process, this paper tries to explore the decision-making strategy and coordination mechanism of the WEEE closed-loop supply chain (CLSC) under the cap-and-trade regulation (CATR). The Stackelberg game model is formulated to address this context consisting of a manufacturer with risk avoidance and a retailer with risk neutrality. Besides, we disclose the specific influence of WEEE collection quality on the strategic decision-making of CLSC members under decentralized and centralized modes. Additionally, the revenue and cost-sharing contract is designed to facilitate coordination within the CLSC, and numerical experiments are performed to help better understand the strategic decision-making and effectiveness of the designed contract mechanism. Results show that within a certain threshold of WEEE collection quality, both recycling rate and total profit increase as collection quality improves, while unit wholesale and retail prices of EEE decrease. Conversely, as the risk aversion of the manufacturer increases, the return rate of WEEE decreases, while the wholesale price and retail price per unit of EEE rise. Under the joint influence of the unit carbon emission quota trading price and risk aversion, the unit carbon emission quota trading price exacerbates the impact of manufacturer risk aversion on the return rate. The revenue and cost-sharing contract also contributes to achieving WEEE CLSC coordination under specific conditions.

Suggested Citation

  • Zhou, Fuli & Zhang, Chenchen & Tiwari, Sunil & Huang, Xingjun & Pratap, Saurabh, 2025. "Decision and coordination of WEEE closed-loop supply chain with risk aversion under the cap-and-trade regulation," International Journal of Production Economics, Elsevier, vol. 280(C).
    • Handle: RePEc:eee:proeco:v:280:y:2025:i:c:s0925527324003347
    DOI: 10.1016/j.ijpe.2024.109477
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0925527324003347
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.ijpe.2024.109477?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Işıl & Vishal V. Agrawal & Atalay Atasu, 2020. "Extended Producer Responsibility for Durable Products," Manufacturing & Service Operations Management, INFORMS, vol. 22(2), pages 364-382, March.
    2. Tseng, Ming-Lang & Bui, Tat-Dat & Lim, Ming K. & Fujii, Minoru & Mishra, Umakanta, 2022. "Assessing data-driven sustainable supply chain management indicators for the textile industry under industrial disruption and ambidexterity," International Journal of Production Economics, Elsevier, vol. 245(C).
    3. Chen, Yuyu & Li, Bangyi & Zhang, Guoqing & Bai, Qingguo, 2020. "Quantity and collection decisions of the remanufacturing enterprise under both the take-back and carbon emission capacity regulations," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 141(C).
    4. Pranab Majumder & Ashok Srinivasan, 2006. "Leader Location, Cooperation, and Coordination in Serial Supply Chains," Production and Operations Management, Production and Operations Management Society, vol. 15(1), pages 22-39, March.
    5. Cheng He & O. Cem Ozturk & Chris Gu & Pradeep K. Chintagunta, 2023. "Consumer Tax Credits for EVs: Some Quasi-Experimental Evidence on Consumer Demand, Product Substitution, and Carbon Emissions," Management Science, INFORMS, vol. 69(12), pages 7759-7783, December.
    6. Ximin (Natalie) Huang & Atalay Atasu & L. Beril Toktay, 2019. "Design Implications of Extended Producer Responsibility for Durable Products," Management Science, INFORMS, vol. 67(6), pages 2573-2590, June.
    7. Bai, Qingguo & Chen, Mingyuan & Xu, Lei, 2017. "Revenue and promotional cost-sharing contract versus two-part tariff contract in coordinating sustainable supply chain systems with deteriorating items," International Journal of Production Economics, Elsevier, vol. 187(C), pages 85-101.
    8. Chun-Hung Chiu & Tsan-Ming Choi, 2016. "Supply chain risk analysis with mean-variance models: a technical review," Annals of Operations Research, Springer, vol. 240(2), pages 489-507, May.
    9. İhsan Yanıkoğlu & Meltem Denizel, 2021. "The value of quality grading in remanufacturing under quality level uncertainty," International Journal of Production Research, Taylor & Francis Journals, vol. 59(3), pages 839-859, February.
    10. Pietro De Giovanni & Georges Zaccour, 2022. "A selective survey of game-theoretic models of closed-loop supply chains," Annals of Operations Research, Springer, vol. 314(1), pages 77-116, July.
    11. Lan Wang & Gangshu (George) Cai & Andy A. Tsay & Asoo J. Vakharia, 2017. "Design of the Reverse Channel for Remanufacturing: Must Profit-Maximization Harm the Environment?," Production and Operations Management, Production and Operations Management Society, vol. 26(8), pages 1585-1603, August.
    12. Fuli Zhou & Yandong He & Panpan Ma & Ming K. Lim & Saurabh Pratap, 2022. "Capacitated disassembly scheduling with random demand and operation time," Journal of the Operational Research Society, Taylor & Francis Journals, vol. 73(6), pages 1362-1378, June.
    13. Nils Roemer & Gilvan C. Souza & Christian Tröster & Guido Voigt, 2023. "Offset or reduce: How should firms implement carbon footprint reduction initiatives?," Production and Operations Management, Production and Operations Management Society, vol. 32(9), pages 2940-2955, September.
    14. Javad Khazaei & Michael Coulon & Warren B. Powell, 2017. "ADAPT: A Price-Stabilizing Compliance Policy for Renewable Energy Certificates: The Case of SREC Markets," Operations Research, INFORMS, vol. 65(6), pages 1429-1445, December.
    15. Wang, Zhen & Duan, Yongrui & Huo, Jiazhen, 2022. "The impact of government intervention measures on recycling of waste electrical and electronic equipment in China considering consumer decision," Energy Policy, Elsevier, vol. 160(C).
    16. Ji, Jingna & Li, Tao & Yang, Lei, 2023. "Pricing and carbon reduction strategies for vertically differentiated firms under Cap-and-Trade regulation," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 171(C).
    17. Emre Nadar & Barış Emre Kaya & Kemal Güler, 2021. "New-Product Diffusion in Closed-Loop Supply Chains," Manufacturing & Service Operations Management, INFORMS, vol. 23(6), pages 1413-1430, November.
    18. Wu, Qianni & Chiu, Chun-Hung, 2023. "The impacts of carbon insurance on supply chain and environment considering technology risk under cap-and-trade mechanism," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 180(C).
    19. He, Yuanjie, 2017. "Supply risk sharing in a closed-loop supply chain," International Journal of Production Economics, Elsevier, vol. 183(PA), pages 39-52.
    20. Ma, Yujie & Du, Gang & Jiao, Roger J., 2024. "Design for product upgradability considering remanufacturing outsourcing: A three-level joint optimization approach," International Journal of Production Economics, Elsevier, vol. 272(C).
    21. Simonetto, Marco & Sgarbossa, Fabio & Battini, Daria & Govindan, Kannan, 2022. "Closed loop supply chains 4.0: From risks to benefits through advanced technologies. A literature review and research agenda," International Journal of Production Economics, Elsevier, vol. 253(C).
    22. Min Wang & Lindu Zhao & Michael Herty, 2018. "Modelling carbon trading and refrigerated logistics services within a fresh food supply chain under carbon cap-and-trade regulation," International Journal of Production Research, Taylor & Francis Journals, vol. 56(12), pages 4207-4225, June.
    23. Li, Zhiwen & Xu, Xianhao & Bai, Qingguo & Chen, Cheng & Wang, Hongwei & Xia, Peng, 2023. "Implications of information sharing on blockchain adoption in reducing carbon emissions: A mean–variance analysis," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 178(C).
    24. Li, Wei & Wang, Peilin & Cheng, Wencheng & Nie, Kai, 2024. "Transnational remanufacturing decisions under carbon taxes and tariffs," European Journal of Operational Research, Elsevier, vol. 312(1), pages 150-163.
    25. Zhou, Qin & Meng, Chao & Sheu, Jiuh-Biing & Yuen, Kum Fai, 2023. "Remanufacturing mode and strategic decision: A game-theoretic approach," International Journal of Production Economics, Elsevier, vol. 260(C).
    26. Fang Tian & Greys Sošić & Laurens Debo, 2019. "Manufacturers’ Competition and Cooperation in Sustainability: Stable Recycling Alliances," Management Science, INFORMS, vol. 65(10), pages 4733-4753, October.
    27. Chai, Qiangfei & Xiao, Zhongdong & Lai, Kee-hung & Zhou, Guanghui, 2018. "Can carbon cap and trade mechanism be beneficial for remanufacturing?," International Journal of Production Economics, Elsevier, vol. 203(C), pages 311-321.
    28. Xiaoshuai Fan & Kanglin Chen & Ying-Ju Chen, 2023. "Is Price Commitment a Better Solution to Control Carbon Emissions and Promote Technology Investment?," Management Science, INFORMS, vol. 69(1), pages 325-341, January.
    29. Choi, Tsan-Ming & Ma, Cheng & Shen, Bin & Sun, Qi, 2019. "Optimal pricing in mass customization supply chains with risk-averse agents and retail competition," Omega, Elsevier, vol. 88(C), pages 150-161.
    30. Maher A. N. Agi & Sohrab Faramarzi-Oghani & Öncü Hazır, 2021. "Game theory-based models in green supply chain management: a review of the literature," International Journal of Production Research, Taylor & Francis Journals, vol. 59(15), pages 4736-4755, August.
    31. Fu, Lingxian & Tang, Jie & Meng, Fanyong, 2021. "A disease transmission inspired closed-loop supply chain dynamic model for product collection," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 152(C).
    32. Zhou, Yu & Xiong, Yu & Jin, Minyue, 2021. "Less is more: Consumer education in a closed-loop supply chain with remanufacturing," Omega, Elsevier, vol. 101(C).
    33. Luo, Ruiling & Zhou, Li & Song, Yang & Fan, Tijun, 2022. "Evaluating the impact of carbon tax policy on manufacturing and remanufacturing decisions in a closed-loop supply chain," International Journal of Production Economics, Elsevier, vol. 245(C).
    34. R. Canan Savaskan & Shantanu Bhattacharya & Luk N. Van Wassenhove, 2004. "Closed-Loop Supply Chain Models with Product Remanufacturing," Management Science, INFORMS, vol. 50(2), pages 239-252, February.
    35. Shi, Yan & Zhang, Zhiyong & Tiwari, Sunil & Yang, Lei, 2023. "Pricing and replenishment strategy for a perishable product under various payment schemes and cap-and-trade regulation," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 174(C).
    36. Liu, Zhi & Li, Kevin W. & Tang, Juan & Gong, Bengang & Huang, Jun, 2021. "Optimal operations of a closed-loop supply chain under a dual regulation," International Journal of Production Economics, Elsevier, vol. 233(C).
    37. Seung Ho Yoo & DaeSoo Kim & Myung-Sub Park, 2015. "Pricing and return policy under various supply contracts in a closed-loop supply chain," International Journal of Production Research, Taylor & Francis Journals, vol. 53(1), pages 106-126, January.
    38. Vishal V. Agrawal & Atalay Atasu & Koert van Ittersum, 2015. "Remanufacturing, Third-Party Competition, and Consumers' Perceived Value of New Products," Management Science, INFORMS, vol. 61(1), pages 60-72, January.
    39. Sovacool, Benjamin K. & Griffiths, Steve & Kim, Jinsoo & Bazilian, Morgan, 2021. "Climate change and industrial F-gases: A critical and systematic review of developments, sociotechnical systems and policy options for reducing synthetic greenhouse gas emissions," Renewable and Sustainable Energy Reviews, Elsevier, vol. 141(C).
    40. Yang, Lei & Hu, Yijuan & Huang, Lijuan, 2020. "Collecting mode selection in a remanufacturing supply chain under cap-and-trade regulation," European Journal of Operational Research, Elsevier, vol. 287(2), pages 480-496.
    41. Gökçe Esenduran & Yen-Ting Lin & Wenli Xiao & Minyue Jin, 2020. "Choice of Electronic Waste Recycling Standard Under Recovery Channel Competition," Manufacturing & Service Operations Management, INFORMS, vol. 22(3), pages 495-512, May.
    42. Shang, Tiancheng & Yang, Lan & Liu, Peihong & Shang, Kaiti & Zhang, Yan, 2020. "Financing mode of energy performance contracting projects with carbon emissions reduction potential and carbon emissions ratings," Energy Policy, Elsevier, vol. 144(C).
    43. Guo, Ying & Zhou, Wenji & Ren, Hongtao & Yu, Yadong & Xu, Lei & Fuss, Maryegli, 2023. "Optimizing the aluminum supply chain network subject to the uncertainty of carbon emissions trading market," Resources Policy, Elsevier, vol. 80(C).
    44. Tian, Jinfang & Yu, Longguang & Xue, Rui & Zhuang, Shan & Shan, Yuli, 2022. "Global low-carbon energy transition in the post-COVID-19 era," Applied Energy, Elsevier, vol. 307(C).
    45. Maher Agi & Sohrab Faramarzi-Oghani & Öncü Hazir, 2021. "Game theory-based models in green supply chain management: a review of the literature," Post-Print hal-03330012, HAL.
    46. Hamed Jalali & Amir Ansaripoor & Vinay Ramani & Pietro De Giovanni, 2022. "Closed-loop supply chain models with coopetition options," International Journal of Production Research, Taylor & Francis Journals, vol. 60(10), pages 3078-3106, May.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Jianteng Xu & Qingguo Bai & Qian Luo, 2023. "Energy conservation strategy and coordination of a closed-loop supply chain with risk-averse members under carbon tax regulation," Operational Research, Springer, vol. 23(3), pages 1-39, September.
    2. Liu, Shan & Yu, Jiayi Joey & Feng, Tianjun, 2025. "The impact of green innovations on firm’s sustainable operations: Process innovation and recycling innovation," Omega, Elsevier, vol. 130(C).
    3. Jin, Minyue & Li, Baoyong & Chen, Xiaoxu & Feng, Lipan, 2024. "The bright and dark sides of servitization under extended producer responsibility," International Journal of Production Economics, Elsevier, vol. 278(C).
    4. Zhou, Tao & Li, Kai, 2024. "Designing manufacturer’s new product technology for a closed-loop supply chain with consumer context effect," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 188(C).
    5. Dexiang Yang & Qin Yang & Lei Zhang, 2023. "Operational Decisions on Remanufacturing under the Product Innovation Race," Sustainability, MDPI, vol. 15(6), pages 1-18, March.
    6. Mostafa Farokhiani & Iman Nosoohi & Ali Shahandeh Nookabadi, 2025. "Product collection structures in closed-loop supply chains," Operational Research, Springer, vol. 25(1), pages 1-38, March.
    7. Xia, Jing & Zheng, Yan & Yang, Lehe & Xiao, Yujie, 2024. "Government intervention in green technology innovation: The carrot, the stick or both?," Technological Forecasting and Social Change, Elsevier, vol. 200(C).
    8. Xu, Xiaoping & Chen, Xinyang & Choi, Tsan-Ming & Cheng, T.C.E., 2024. "Platform financing versus bank financing: “When to choose which” for green production systems," European Journal of Operational Research, Elsevier, vol. 317(2), pages 515-532.
    9. Chaonan Li & Tianyi Guo & Yan Chen, 2022. "Robust Emission Reduction Strategies under Cap-and-Trade and Demand Uncertainty," Sustainability, MDPI, vol. 14(20), pages 1-27, October.
    10. Kong, Junjun & Chua, Geoffrey A. & Yang, Feng, 2023. "Firms’ cooperation on recycling investments in a three-echelon reverse supply chain," International Journal of Production Economics, Elsevier, vol. 263(C).
    11. Liu, Jing & Xia, Senmao & Wang, Zhaoxing & Nie, Jiajia & Ameen, Nisreen & Yan, Cheng & Lim, Ming K., 2023. "How to balance economic profits and environmental protection: The impacts of cash hedging on remanufacturing firms," International Journal of Production Economics, Elsevier, vol. 258(C).
    12. Juan Tang & An‐Lin Song & Chang‐Yi Liu & Zhi Liu, 2023. "Optimal decisions in a remanufacturing supply chain under money‐back guarantees," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 44(4), pages 2254-2277, June.
    13. Zhao, Senlin & You, Zhuangzhuang & Zhu, Qinghua, 2022. "Effects of asymmetric cost information on collection outsourcing of used products for remanufacturing," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 162(C).
    14. Wan, Yao & Yang, Lei & Zhang, Jiahua & Feng, Lipan, 2024. "Optimal trade-in programs for quality differentiated recycled products," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 188(C).
    15. Tang, Ruihong & Yang, Lei & Ji, Jingna, 2023. "Impacts of fairness concerns on financing equilibrium in a low-carbon supply chain," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 180(C).
    16. Mao, Huiying & Wang, Wenbin & Liu, Conghu & Xu, Yi & Zhao, Shuiying, 2023. "Effects of the carbon emission quota policy on the quality and sales of manufactured and remanufactured products," International Journal of Production Economics, Elsevier, vol. 266(C).
    17. Wang, Yong & Jiang, Qiong & Guan, Xu & Guan, Xiangyang, 2023. "Recycling channel design and coordination in a reverse supply chain with customer green preference," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 179(C).
    18. Reza Zanjirani Farahani & Nasrin Asgari & Luk N. Van Wassenhove, 2022. "Fast Fashion, Charities, and the Circular Economy: Challenges for Operations Management," Production and Operations Management, Production and Operations Management Society, vol. 31(3), pages 1089-1114, March.
    19. Subhamoy Bera & Bibhas C. Giri, 2024. "Competitive used products collection strategies in a closed-loop supply chain through tri-partite evolutionary game theory," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 26(12), pages 30667-30700, December.
    20. Zhang, Zhichao & Xu, Haiyan & Chen, Kebing & Zhao, Yingxue & Liu, Zhi, 2023. "Channel mode selection for an e-platform supply chain in the presence of a secondary marketplace," European Journal of Operational Research, Elsevier, vol. 305(3), pages 1215-1235.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:proeco:v:280:y:2025:i:c:s0925527324003347. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/ijpe .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.