Impact of Incentive Policies on the Profitability of Manufacturers and Third-Party Remanufacturers in the Circular Economy

In the realm of remanufacturing, the strategic choice of globalization stands at a crossroads, promising technological leaps, enhanced value creation, and broader opportunities. This study unveils a sophisticated model that scrutinizes the impact of incentive policies, with a focus on outsourcing subsidies, on the financial outcomes of manufacturers and third-party remanufacturers within the circular economy. Incorporating variables such as pricing strategies, remanufacturing capacity, and warranty costs, the model sets forth distinct objectives and constraints for both parties. The findings highlight the profound influence of these incentives on profitability dynamics. While manufacturers have the potential to amplify both the remanufacturing market and their profit margins through judicious use of these incentives, the success of such endeavors hinges on factors like market demand, astute pricing, and cost optimization. The research delineates three plausible scenarios: (1) manufacturers facing downturns while third-party remanufacturers prosper, (2) a win–win profitability scenario, or (3) a challenging landscape with losses for both. To navigate these outcomes and ensure effective policy implementation, a deep understanding of market intricacies and strategic cost management is paramount. In essence, this study accentuates the importance of meticulously designed policies and decision-making tools in fostering a resilient circular economy and sustainable progression, serving as a beacon for industry stakeholders.