Optimal pricing strategy in the closed-loop supply chain using game theory under government subsidy scenario: A case study

Abstract

Automotive battery production always receives government supports which directly affect the recycling of used products collected from secondary markets. Accordingly, an optimal product pricing strategy and efficient policy suggestions must be provided for this industry. This study used Stackelberg models to analyze three categories of pricing strategies related to the recycling process of car batteries when government subsidy is paid. These models are applied to make optimal decisions in two centralized and decentralized modes to investigate the links between and influences of different parameters of the problem on one another. Finally, a numerical example based on a real case study in Iran is applied to the models. The results indicate that making centralized decisions leads to a higher level of profitability than decentralized decision-making in the under-study industry. Accordingly, maintaining coordination and integration among the supply chain components in the decision-making process increases the profitability of the entire network.