Differential game analysis of recycling mode and power structure in a low-carbon closed-loop supply chain considering altruism and government’s compound subsidy

In the age of low-carbon circular economy, how the low-carbon closed-loop supply chain (LC-CLSC) members make decisions to effectively achieve carbon neutrality and recycling of waste products becomes the focus of research. This paper investigates the optimal combination of two recycling modes and two power structures in a LC-CLSC considering the leading party’s altruism and government’s compound subsidy from a long-term dynamic perspective. Three main findings are obtained in this paper: first, when there is no emission reduction subsidy and recycling subsidy, the leading manufacturer or retailer should choose their own recycling mode while ensuring their own reasonable altruistic intensity. Second, when the government provides optimal emission reduction subsidy and recycling subsidy with the goal of maximizing social welfare, from the perspective of obtaining higher utility of the leading party, the leading party should choose the following party recycling mode. Finally, both emission reduction subsidy and recycling subsidy rates will decrease with the increase of the leading party’s altruistic intensity. In the four combinations, if the manufacturer has the same status, the emission reduction subsidy rate will be the same, and if the recycler has the same status, the recycling subsidy rate will also be the same.