Effects of emissions constraint on manufacturing/remanufacturing decisions considering capital constraint and financing

Considering the different capital conditions (i.e. without capital constraint, with capital constraint, and with financing), this paper studies the manufacturing/remanufacturing decisions under emissions trading policy in a single period. Three mathematical models are developed to determine manufacturing/remanufacturing quantities that maximize total profits, which include sale revenue, revenue or expense of emissions trading, manufacturing/remanufacturing costs, and financing cost or interest revenue. Then, numerical example is provided to explore the comparison results on the optimal production quantities of new and remanufactured products, total profits and carbon emissions under different capital conditions and to analyze the impacts of parameters related to carbon emission, such as carbon price and carbon cap. The results indicate that, when capital constraint is considered, there always exists the quantity of recycled product is insufficient, but whether or not the other two conditions appear the insufficiency of recycled products mainly depends on recovery rate and carbon price; When financing is considered and the corresponding recovery rate is high enough, the increased recovery rate decreases the carbon emissions and increases the total profit; Considering capital constraint, the carbon price and carbon cap have greater influences on manufacturing/remanufacturing decisions, and the increased carbon cap can weaken the capital constraint and bring manufacturers more profit. Finally, the paper provides some applicable suggestions to manufacturers and policy-makers.