Manufacturers’ Trade-in Channel Selection in a Closed-Loop Supply Chain Under Carbon Cap-And-Trade and Carbon Tax Policies

This study investigates trade-in channel selection in a closed-loop supply chain under a hybrid carbon policy framework that integrates cap-and-trade and carbon taxation. Game-theoretic models are developed for three manufacturer-led channels: manufacturer trade-in (M-CX), retailer trade-in (R-CX), and third-party trade-in (T-CX). The analysis examines pricing strategies, profitability, and carbon emission reductions across these channels. The key findings are as follows: (1) Carbon tax consistently compresses manufacturer profits, whereas cap-and-trade mechanisms exhibit a non-linear U-shaped effect. Manufacturer profits remain highest under the M-CX channel, irrespective of policy intensity. (2) Retail prices are most sensitive to carbon policies under the T-CX channel, where trade-in rebates increase with carbon intensity. The R-CX channel sustains higher retail prices and rebates than M-CX, while T-CX surpasses both under conditions of high carbon intensity. (3) Carbon emission reductions decline sharply under M-CX and R-CX as policy stringency increases. In contrast, the T-CX channel establishes a buffering mechanism through rising rebates, exhibiting the slowest rate of decline. At low carbon intensity, T-CX yields the lowest reduction levels; however, under high intensity, it overtakes the other channels to achieve the highest reduction. This study offers insights for manufacturers’ channel selection and government policy coordination under hybrid carbon regulation regimes.