Outsourcing decision-making in global remanufacturing supply chains: the impact of tax and tariff regulations
Outsourcing decision-making in global remanufacturing supply chains: the impact of tax and tariff regulations
In contemporary international remanufacturing supply chains, whether an original equipment manufacturer (OEM) engages in remanufacturing operations or outsources to a third-party remanufacturer (TPR) is influenced by tax and tariff regulations. This study develops a two-stage game model for the decision-making of an OEM from an exporting country showing that the optimal remanufacturing model is significantly affected by the tax and tariff regulations of the importing country and more particularly, the difference between sales tax on remanufactured products and the unit product import tariffs on new products. The model selections for the OEM and the importing country align when this difference is close to zero. This paper is one of the few examining the impact of tax and tariff regulations on outsourcing decisions in remanufacturing contexts, which is largely neglected in the extant literature but has become increasingly important, especially with recent development trends of deglobalization (e.g., Brexit, the US–China trade war, and various sanctions). The significance of this study is threefold: the work makes novel theoretical contributions to the decision-making game model with tax and tariff constructs taken into consideration, has practical implementations for optimizing the strategic business deployment of OEMs, and has implications for consideration of policy and social welfare by policy makers of the destination country.
Decision analysis, Global supply chain, Outsourcing, Remanufacturing, Tax and tariff
997-1010
Li, Wei
5557a1ef-d477-4894-8891-ef36b410b783
Sun, Hui
5bdc68a5-9920-46ff-9a13-fef0034945fc
Dong, Hao
73a03c20-d661-446a-b45e-d2cf9e556998
Gan, Yuqin
04890808-9fc3-4ef9-9ee1-e2ad54f47513
Koh, Lenny
fef23dcd-efd9-43dc-9517-8c96a3579c39
14 May 2022
Li, Wei
5557a1ef-d477-4894-8891-ef36b410b783
Sun, Hui
5bdc68a5-9920-46ff-9a13-fef0034945fc
Dong, Hao
73a03c20-d661-446a-b45e-d2cf9e556998
Gan, Yuqin
04890808-9fc3-4ef9-9ee1-e2ad54f47513
Koh, Lenny
fef23dcd-efd9-43dc-9517-8c96a3579c39
Li, Wei, Sun, Hui, Dong, Hao, Gan, Yuqin and Koh, Lenny
(2022)
Outsourcing decision-making in global remanufacturing supply chains: the impact of tax and tariff regulations.
European Journal of Operational Research, 304 (3), .
(doi:10.1016/j.ejor.2022.05.016).
Abstract
In contemporary international remanufacturing supply chains, whether an original equipment manufacturer (OEM) engages in remanufacturing operations or outsources to a third-party remanufacturer (TPR) is influenced by tax and tariff regulations. This study develops a two-stage game model for the decision-making of an OEM from an exporting country showing that the optimal remanufacturing model is significantly affected by the tax and tariff regulations of the importing country and more particularly, the difference between sales tax on remanufactured products and the unit product import tariffs on new products. The model selections for the OEM and the importing country align when this difference is close to zero. This paper is one of the few examining the impact of tax and tariff regulations on outsourcing decisions in remanufacturing contexts, which is largely neglected in the extant literature but has become increasingly important, especially with recent development trends of deglobalization (e.g., Brexit, the US–China trade war, and various sanctions). The significance of this study is threefold: the work makes novel theoretical contributions to the decision-making game model with tax and tariff constructs taken into consideration, has practical implementations for optimizing the strategic business deployment of OEMs, and has implications for consideration of policy and social welfare by policy makers of the destination country.
Text
EJOR-D-21-02344_R2
- Accepted Manuscript
Text
1-s2.0-S0377221722003903-main
More information
Submitted date: 5 October 2020
Accepted/In Press date: 10 May 2022
e-pub ahead of print date: 14 May 2022
Published date: 14 May 2022
Additional Information:
Funding Information:
The authors are grateful to the editor and anonymous reviewers for their insightful comments and suggestions to this paper. This study was partially supported by the National Natural Science Foundation of China ( 71971078; 71601074 ) and the Natural Science Foundation of Hunan Province ( 2019JJ40042 ).
Publisher Copyright:
© 2022 The Author(s)
Keywords:
Decision analysis, Global supply chain, Outsourcing, Remanufacturing, Tax and tariff
Identifiers
Local EPrints ID: 444472
URI: http://eprints.soton.ac.uk/id/eprint/444472
ISSN: 0377-2217
PURE UUID: 8fc5ddfe-fd47-40a3-94a7-0f24301fcbd9
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Date deposited: 20 Oct 2020 16:33
Last modified: 17 Mar 2024 05:59
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Contributors
Author:
Wei Li
Author:
Hui Sun
Author:
Yuqin Gan
Author:
Lenny Koh
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