Government subsidies in manufacturing and remanufacturing with consumer segment and heterogeneous demand

Waste products have double properties of environmental hazard and resource recovery, while recycling behavior has greater positive external effect of economic, which often results in the low enthusiasm for enterprises to engage in remanufactured activity. For price decisions on whether government subsidizes closed-loop supply chain or not, Stackelberg game model were constructed under three scenarios: none is subsidized (Model N), subsidize to manufacturer (Model M) and subsidized to recycler (Model R) to obtain the optimal government subsidy and price decision, as well as analyze the difference among the equilibriums of four scenarios. From the conclusion, we can find that the government subsidy improve the social welfare, as well as the government implement different subsidy policies based on the needs for economic and social progress.