Government subsidies to reverse supply chains can play important roles in driving or curtailing the flows of recycled items. We examine the impacts of exogenous subsidies on recycled material flows in a decentralized reverse supply chain where each player acts according to its own interests. We outline a multi-tiered model of reverse supply chains consisting of sources of electronic scrap products, collectors, processors and demand markets. The individual behavior of each player is governed by participants' optimality conditions, which are mathematically transformed into a variational inequality formulation. The modified projection method is utilized for solving the equilibrium flows of each player. We investigate the impact of alternate schemes of government subsidies on decisions of the equilibrium amount, subsidy effectiveness per unit subsidy, and subsidy elasticity. For the case studied in this paper, subsidizing the tier of processors shows the superiority in terms of the performance measured.
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