Impact of Carbon Abatement Policies on Cross-Border Supply Chain Remanufacturing: the Role of Import Quotas

This study investigates the strategic interplay between import quotas and carbon abatement policies in cross-border closed-loop supply chains. Specifically, it examines the impact of three distinct carbon policies—carbon constraints (Policy A), carbon trading (Policy B), and carbon tariffs and taxes (Policy C) on the remanufacturing production decisions within a supply chain comprising an original equipment manufacturer (OEM) and a retailer, as well as on the social welfare of the importing country and environmental sustainability. The findings challenge conventional assumptions by demonstrating that higher carbon trading prices imposed by importing countries do not necessarily incentivize OEMs to reduce emissions or promote remanufacturing. Instead, more stringent carbon tariffs are more effective in encouraging emission reductions. Furthermore, the optimal policy mix for maximizing social welfare and environmental benefits is contingent upon the levels of import and carbon quotas: Policy A is most effective under low quotas, Policy B under high quotas, and Policy C under moderate quotas. When remanufactured products exhibit lower carbon footprints, reducing import quotas enhances environmental benefits, whereas lowering carbon quotas improves social welfare under Policy A. Additionally, the study highlights that governments can calibrate import quotas in response to fluctuations in carbon trading prices or carbon tariffs to achieve a win-win between economic and environmental objectives. By advancing a theoretical framework for policy optimization in cross-border closed-loop supply chains, this research provides valuable insights for policymakers and industry stakeholders in designing sustainable and economically viable carbon abatement strategies.