Abstract: As the discarded electronic products emerging and social environmental protection consciousness enhancement, the recycling and disposal of discarded electronics becomes one of the major problems. In the existing literature, scholars pay more attention to the influence of prices or tax policy on recyclers or processing business operation efficiency, but research on the key problem of motivation in reverse supply chain, that how to determine the price of reverse supply chain and subsidies, is relatively rare. In this paper, a Stackelberg model is presented to determine prices and socially optimal subsidy fees in decentralized reverse supply chains where each entity independently acts according to its own interests based on the perspective of social welfare maximization. Social welfare model can test incentives of prices and subsidies in the dispersion management system in the reverse supply chain. Through the comparison of social welfare model and fund balance model, and comparing cases of numerical calculation, in which data collected from market of smart phone in Taobao website. When considering the cost of the appropriate decision mechanism, the research results can provide policy makers with a social welfare perspective. The results show that: MIS and recyclers behave at the equilibrium status by choosing optimal selling quantity in the market and optimal reward money for customers bringing E-Waste products to recyclers. The impact of choke-off price, sensitivity of price with respect to the quantity demanded, base collected quantity of zero reward money, and sensitivity of the collected quantity with respect to the reward money on the value in the social welfare model is better than fund balance model. In addition, our analysis results show that the government is encouraging the MIS to improve their production processes to reduce pollution costs, or selling products containing fewer pollutants, so no-recycling of electronic waste products would not lead to high cost of pollution, it also shows that cost of reducing pollution is lower than that of repairing.

Key words: reverse supply chains, social welfare model, fund balance model, recycling fees, subsidy