Differential Pricing of Closed-loop Supply Chain Based on Recycling Competition between Retailer and Third-party Recycler

Abstract

In a closed-loop supply chain(CLSC) consisting of a manufacturer, a retailer and a third-party recycler, this work takes into account both products competition and recycling channels competition to explore the optimal pricing strategy of the CLSC. It builds the decentralized and centralized differential pricing models respectively, and the numerical examples are conducted to verify the effectiveness and practicality of the proposed models. The results show that under the decentralized decision, the sale price of new products and remanufactured products rises with the increase of product substitution coefficient; when the recycling competitive elasticity coefficient increases, the recycling prices of retailer and third-party recycler rise while the manufacturer's recycling price remains unchanged. Under centralized decision, the recycling prices of retailers and third-party recyclers are not affected by recycling competition. The results also show that the product competition coefficient has a positive impact on the supply chain profit, and the recycling competitive elasticity coefficient has a negative impact on the profit of supply chain participants but benefits customers.