When Do Remanufacturing Subsidies Work? Core Availability, Product Design, and Resource Recovery in a Closed-Loop Supply Chain

Remanufacturing subsidies are expected to expand remanufacturing, but realized output also depends on how many usable cores earlier sales make available. We study a two-cycle closed-loop supply chain in which an original equipment manufacturer (OEM) chooses a continuous product-architecture adjustment and a first-period price, an independent third-party remanufacturer (TPR) receives a per-unit subsidy, and an exogenous share of first-period sales becomes usable cores through an open recovery channel. At a strictly interior core-limited optimum that remains feasible and selected, a marginal subsidy raises TPR profit but leaves prices, quantities, and architecture unchanged. A finite subsidy increase can instead move the OEM to a different strategy. In the benchmark, the resulting demand-to-core-limited switch lowers first-period sales by 12.07% and remanufactured sales by 6.48%, even though core utilization rises from 94.0% to 100%. With a fixed architecture, such a switch lowers remanufacturing under stated interior conditions; once architecture is reoptimized, the fixed-architecture comparison no longer guarantees a fall, and verified examples show that remanufacturing can rise despite fewer cores. Across 1948 sampled parameter paths, 1064 of 1295 such switches are downward and 231 upward. Because core availability, core utilization, and realized remanufacturing can move in different directions, recovery managers and policymakers should monitor them separately. The results concern quantities and private returns in an open-recovery setting, not welfare or environmental impacts.