Information sharing in a closed-loop supply chain with technology licensing

Abstract

This paper analyzes the benefits of information sharing in a closed-loop supply chain with a manufacturer, a distributor and a third party under technology licensing. The distributor has access to private market demand information and decides whether to share information with the manufacturer. We investigate three kinds of remanufacturing scenarios, namely (1) the manufacturer taking the responsibility for remanufacturing, (2) the manufacturer licensing the distributor to undertake remanufacturing, (3) the manufacturer licensing the third party to conduct remanufacturing. We adopt Stackelberg game to obtain equilibrium decisions of each remanufacturing scenario with/without information sharing. We show that, regardless of whether technology licensing exists in remanufacturing models, information sharing always results in a profit increase to the manufacturer and the third party, whilst a profit loss to the distributor. Such profit loss of the distributor can be effectively reduced with the introduction of technology licensing in each remanufacturing model. As for the remanufacturing choice, if the distributor/the third-party saving unit cost is high enough, the manufacturer would prefer distributor/third-party remanufacturing mode with information sharing instead of manufacturer-remanufacturing mode as he could share more remanufacturing benefits by charging a licensing fee from the distributor/the third party. Our study extends and complements prior research that has only examined remanufacturing mode combined with either technology licensing or information sharing.