Pricing and Coordination of Green Closed-Loop Supply Chain With Fairness Concerns

Abstract

Due to serious environmental pollution and waste of resources, the government advocates the development of a sustainable circular economy, and academia and manufacturing are gradually paying attention to the green closed-loop supply chain. In this paper, a green closed-loop supply chain consisting of a manufacturer and a retailer is considered. The manufacturer would cost a great deal to recycle waste products for remanufacturing while developing and producing green products, which may concern about the fairness of the profit distribution. Based on game theory, four different game scenarios are proposed, which are a centralized model and three decentralized models including manufacturer considering fairness neutrality, the retailer considering manufacturer’s fairness concerns and the retailer ignoring manufacturer’s fairness concerns. This paper compares and analyzes the optimal decision-making of the manufacturer and retailer in different scenarios, discusses the impact of manufacturer’s fairness concerns on various decision variables, the profits of supply chain members and the overall profits, and then studies the effect of green efficiency on green closed-loop supply. The results show that this behavior would cause less damage to the green closed-loop supply chain and is more conducive to ensuring the environmental quality of green products, recycling and reuse of waste products and consumer rights when the retailer considers the manufacturer’s fairness concerns behavior. By designing a revenue-sharing contract to coordinate the supply chain, it can effectively achieve the Pareto improvement of the green closed-loop supply chain with fairness concerns.