A novel coordination mechanism to coordinate the multi-agent reverse supply chain with fairness concerns

Abstract

In the recycling industry, reverse supply chain (RSC) management with used and end-of-life product collection and remanufacturing has an important role to play with respect to improving environmental sustainability. Such a RSC is generally composed of more than two heterogenous agents such that the existing contracts in the literature fail to coordinate it. Besides, as long as one of these agents makes profit comparisons and exhibits fairness concerns, it would further complicate this coordination problem. In this paper, we develop a biform game-based coordination mechanism, combining the non-cooperative and cooperative games, to coordinate a multi-agent RSC with one remanufacturer and two competition collectors, where one of the collectors has distributional fairness concerns. Applying the game-theoretic and numerical analyses, we obtain the following results: (1) Our proposed methods accomplish the coordination in the sense that all the RSC agents are better off than in the case of the non-cooperative game. (2) We identify the conditions under which the fairness-minded collector would achieve fair outcomes in the biform game, as is the case for the non-cooperative game. (3) In contrast to the non-cooperative game case, the biform game mechanism resolves the impact of fairness concerns on the recycling channel to a certain extent, as both the coalition externalities and biform game-based contracts make it more compatible across all RSC agents. Our main contributions are the adoption of novel biform games combined with behavioral economics factors to study the coordination challenge of multi-agent RSC with collector's fairness concerns.