Government regulation and enterprise decision in China remanufacturing industry: evidence from evolutionary game theory

Chen, Xihui; Cao, Jian; Kumar, Sanjay

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.