Effects of take-back legislation on pricing and coordination in a closed-loop supply chain

Abstract

<p style='text-indent:20px;'>This study investigates the effects of take-back legislation and channel structures on pricing, collection, and coordination in a closed-loop supply chain (CLSC). By establishing the centralized, manufacturer-led, and retailer-led CLSC models, we analyze the equilibrium solutions of channel players and the government. We obtain the following results. (1) The manufacturer can accept a higher collection target and exit the market later in the centralized model than in decentralized decision-making models. Moreover, the manufacturer exists the market earlier in the retailer-led model with regulation compared with the manufacturer-led model. (2) The government's optimal collection target is the same under manufacturer-led and retailer-led models when the regulation comes into force. (3) Revenue-sharing and two-part tariff contracts can effectively coordinate manufacturer-led and retailer-led CLSCs under take-back legislation. Finally, we conduct several numerical examples and obtain relevant managerial insights. Our results indicate that the correlation between take-back legislation and channel structure has a significant impact on the pricing and coordination decisions of the CLSC; furthermore, the government should flexibly set the collection target when facing different supply chain and channel power structures in a CLSC.</p>