Pricing and coordination in a reverse supply chain with online and offline recycling channels: A power perspective

Abstract

Faced with a large number and a wide variety of used products, it is of great significance to study how to design an effective reverse channel for recycling waste products, to obtain better economic and environmental benefits. In this paper, we explore how various channel power structures affect the pricing decisions and coordination in a reverse supply chain (RSC) with competitive online and offline recycling channels. One centralized and three decentralized RSC models are established under three power structures: remanufacturer-led, collector-led, and vertical Nash. Through equilibrium comparison, we find that either the remanufacturer or the collector has sufficient incentives to lead the RSC, however, the balanced power structure (Vertical Nash) is more favorable to the RSC system. In addition, we design a mechanism, which consists of an online acquisition price scheme and a two-part tariff contract, to coordinate dual-recycling channel RSCs under various power structures. Finally, we extend the model to asymmetric initial collection quantity and asymmetric recycling channel cost cases and verify the robustness of our basic propositions. Our analysis generates managerial insights into the relationship between the channel power structure and recycling channel competition and provides guidance for strategic decisions by remanufacturers and recyclers in dual-recycling channel RSC.