Abstract
In this study, we consider a three-echelon closed-loop supply chain consisting of a manufacturer, a collector, and two duopolistic recyclers. In the supply chain, the collector collects end-of-life products from consumers in the market. Then, both recyclers purchase the recyclable waste from the collector, and each recycler turns them into new materials. The manufacturer has no recycling facilities; therefore, the manufacturer only purchases the recycled and new materials for its production from the two recyclers. Under this scenario, price competition between recyclers is inevitable. With two pricing structures (Nash and Stackelberg) of the leaders group and three competition behaviors (Collusion, Cournot, and Stackelberg) of the followers group, we suggest six different pricing game models. In each of them, we establish a pricing game model among the members, prove the uniqueness of the equilibrium prices of the supply chain members, and discuss the effects of competition on the overall supply chain’s profitability. Our numerical experiment indicates that as the price competition between recyclers intensifies, the supply chain profitability decreases. Moreover, the greater the recyclability degree of the waste is, the higher the profits in the supply chain become.
Highlights
Over the past few decades, profitability improvements and cost leadership have been the main goals of supply chain management
The two recyclers compete with regard to the selling prices of their recycled materials. e aim of this study is to investigate pricing and ordering decisions during the waste recycling process in a three-echelon closed-loop supply chain with duopolistic recyclers using a game-theoretic framework
We assume that the manufacturer and the collector belong to the leaders group and that the two recyclers belong to the followers group. e basic structure of the pricing game model is as follows. e leaders group initially determines the prices devised by the collector and the manufacturer, after which the followers group determines those devised by the two recyclers. is assumption is reasonable because, in our setting, there exists price competition between the two recyclers, and they are under pressure from the collector and manufacturer with regard to the demand for recyclable waste and the supply of recycled materials, respectively. erefore, the decision power of the leaders group is greater than that of the followers group
Summary
Over the past few decades, profitability improvements and cost leadership have been the main goals of supply chain management. In 2016, the potential recovery of seven precious resources, iron, copper, gold, silver, aluminum, palladium, and plastics in WEEE, amounts to approximately 12.3 million tonnes in Europe [19] In light of this fact, the recyclability of WEEE plays a key role in terms of environmental protection and with regard to the stable supply and demand for various ICT products. Based on these observations, this paper deals with a closed-loop supply chain in which two recyclers compete with each other.
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