Differentiated Subsidy Policies for Outsourcing Remanufacturing Under Subsidy Phase-Out: Innovation, Production, and Consumption

In outsourcing remanufacturing, the Original Equipment Manufacturer (OEM) is responsible for product design and sales, while the Third-Party Remanufacturer (TPR) undertakes remanufacturing operations. The separation of responsibilities often leads to incentive misalignment and hinders industry development. Government subsidies are critical for mitigating this conflict, and gradual subsidy phase-out has become a common policy trend. Therefore, this paper constructs a game-theoretic model between the OEM and the TPR under outsourcing remanufacturing. Innovation, production, and consumption subsidies are integrated into a unified analytical framework. Their impacts are systematically analyzed and compared. The subsidy phase-out is captured through detailed analysis across different subsidy intervals, leading to a piecewise equilibrium structure that reflects firms’ strategic adjustments as subsidy intensity declines. The results indicate that innovation subsidies primarily incentivize the OEM to enhance design for remanufacturing but have a limited impact on production and pricing decisions of both the OEM and TPR. Conversely, production and consumption subsidies significantly affect the TPR’s market entry strategies, exhibiting phasic characteristics during the phase-out process. Further comparison reveals that production and consumption subsidies are more effective in promoting the expansion of remanufacturing scale. The innovation subsidies are more advantageous for improving carbon efficiency and achieving long-term emission reduction in the mature stages of the industry.