Pricing and bundling strategies for complementary products in a closed-loop green supply chain under manufacturers’ different behaviors

Abstract

This study attempts to incorporate product complementarity and bundling strategy with green innovation and remanufacturing in a two-stage supply chain. For doing so, it considers a green closed-loop supply chain that combines two manufacturers and a typical retailer to deal with complementary products. Based on the manufacturer-led Stackelberg game-theoretic approach, it first develops two models considering the bundling strategies of the retailer. Each of these two models again establishes three sub-models under consideration of whether the manufacturers make their decisions jointly or simultaneously or sequentially. The optimal responses and the profitability under various models are compared both analytically and numerically to get some insights. The results exhibit that (a) regardless of different bundling strategies, the sequential decision-making scenario is beneficial for the leading manufacturer while the joint decision-making scenario is profitable for another manufacturer, the retailer, and the entire supply chain, (b) no bundling strategy is preferable in a green-sensitive market, even though it gives less profit to channel individuals, (c) in the Stackelberg scenario, the decision of which of two manufacturers will profit more depends on product complementarity and the residual values obtained from end-of-used products acquisition and their handling, and (d) the level of product complementarity and bundle price discount play important role in determining the appropriate bundling strategy.