Coordination Mechanism of E-Closed-Loop Supply Chain under Social Preference

Abstract

This study investigates the effect of social preference on the recycling decision and coordination in an E-closed-loop supply chain (E-CLSC). Firstly, we set the dynamic E-CLSC game model including a manufacturer, an E-commerce platform (E-platform) and a recycler, where the manufacturer dominates the supply chain and both the E-platform and the recycler are followers. Secondly, we propose an E-CLSC information structure to depict four symmetry and asymmetry cases about the E-platform’s fairness concern and the manufacturer’s altruistic reciprocity, and the backward induction method is adopted to solve the equilibrium in each case. By comparative analysis, we propose a revenue-sharing and cost-sharing contract to optimize recycling decisions, coordinate the E-CLSC and Pareto-improve all parties’ profits. We show that whether information is symmetrical or not, only the wholesale price contract cannot coordinate the E-CLSC, whereas the revenue-sharing and cost-sharing contract can always achieve optimal recycling decisions, coordinate the supply chain and Pareto-improve all parties’ profits with a constant cost sharing ratio. In addition, the E-platform’s fairness concern can widen the range of the revenue sharing ratio and make it easier to coordinate the E-CLSC, but the manufacturer’s altruistic reciprocity may narrow the range of the revenue sharing ratio and make it harder to coordinate the E-CLSC.