Pricing, carbon emission reduction, collection decision, and coordination in a low-carbon closed-loop supply chain

Abstract

In this paper, we examine the influences of different game structures on the optimal decisions and performance of a low-carbon closed-loop supply chain (CLSC) with price and carbon emission level dependent market demands. We consider centralized and decentralized game theoretic models and develop two coordination mechanisms of a low-carbon CLSC with one manufacturer and one retailer. We also identify the optimal decisions of the collection level, carbon emission reduction level, and pricing under different situations, namely centralized decision, manufacturer-led, retailer-led, and Vertical Nash. It can be observed from a systematic comparison and numerical analysis that the Vertical Nash structure is the best in the levels of the carbon emission reduction, the used-product collection, the retail price, and the entire supply chain's profit under the decentralized decision. The cooperatively reducing carbon emission is positive for the carbon emission reduction and collection under a manufacturer-led structure.