<p>The growing scarcity of natural resources and increasing consumer awareness of environmental issues have intensified the need for sustainable supply chain practices. This study examines a green closed-loop supply chain model influenced by a government reward-penalty mechanism and evaluates the strategic role of an exchange policy, collection effort, and promotional effort. We develop and analyze two scenarios: one without an exchange policy and another that incentivizes consumers to return used products through promotional exchanges. The firm determines optimal pricing, collection intensity, and promotional strategies while recovering end-of-life products for remanufacturing. An analytical framework is employed to derive equilibrium strategies, followed by numerical and sensitivity analyses to validate the model’s behavior under varying parameter settings. The findings show that implementing an exchange policy significantly enhances both profit and return rates, outperforming the scenario without such a policy. The reward-penalty mechanism further encourages firms to increase collection efforts, leading to higher recovery volumes and improved sustainability outcomes. Promotional efforts amplify consumer participation in exchange programs, while green product initiatives contribute positively to both environmental impact and profitability. Overall, the study highlights the value of coordinated government and firm-level strategies in achieving economically viable and environmentally sustainable supply chains. By modeling the combined effects of regulatory incentives, exchange mechanisms, and operational efforts, this research offers actionable insights for policymakers and supply chain managers seeking to optimize returns, costs, and ecological performance.</p>