Game Strategy Selection and Pricing Decisions in Closed-Loop Channel

Abstract

The closed-loop supply chain (CLSC) models with product remanufacturing by the manufacturer which distributing products via direct and indirect distribution channels and collecting used products by retailer were constructed. Using of game theory, we consider the pricing and collecting decisions under two market game settings: the Bertrand and the Stackelberg price competition models. Then the impacts of the changes in collecting subsidy and wholesale price on pricing and the profits of the CLSC were analyzed emphatically. According to the range of the collecting subsidy and wholesale price, we discussed the action strategies of the both sides. Finally, the correctness of the model was
verified with numeric calculation. The results show that there exist a critical value of the collecting subsidy and wholesale price, 1)the manufacturer can obtain a maximum profit when the collecting subsidy reaches to the critical value, and in this case the optimal strategies for the manufacturer and retailer are leader-follower strategy; 2) when the wholesale price lower than the critical value, the optimal strategies for the manufacturer and retailer are leader-follower strategy, in this case the profit of the manufacturer, the retailer and the whole system’s are all higher than that of the simultaneously move strategy.