Pricing Strategies in Dual-Channel Reverse Supply Chains Considering Fairness Concern.

Di Wu,Juhong Chen,Ruyu Yan,Ruijun Zhang

doi:10.3390/ijerph16091657

Abstract

The fierce competition in the recycling industry and the rapid development of internet technology has prompted recycling centers to develop a dual-channel reverse supply chain with both offline and online recycling channels. After the introduction of online channels, recycling centers and third-party recyclers (TPR) have paid attention to the division of profits in supply chain systems and the behavior of fairness concerns. Therefore, it is necessary to help recycling enterprises make pricing decisions in consideration of fairness concerns. This paper is aimed at answering the following two main questions: (1) When the recycling center or TPR have fairness concerns, how does the optimal pricing and revenue of supply chain members change when both sides are neutral? (2) When the fairness concern coefficient changes, how does the overall revenue of the supply chain system change? How should supply chain members adjust their pricing decisions to maximize their own profits? In order to solve the above problems, Stackelberg game models were made from three aspects: both sides are neutral, only the TPR has fairness concerns, and only the recycling center has fairness concerns. Based on the results of the example analyses for the model, we found that when only the TPR has fairness concerns, the profit of the recycling center and the transfer price of offline channels will decrease, while the profit of TPR is the opposite. Furthermore, when only a recycling center has fairness concerns, it will lead to the reduction of not only the recycling price and transfer price of offline channels, but also the profits of the entire supply chain system. Specially, whether it is for a recycling center or TPR, a lower level of fairness concern coefficient has a stronger impact on pricing and revenue than at high levels.

Highlights

Over the recent decade, the continuous innovation of electronic technology and consumers’fanatical pursuit of a new generation of electronic products have accelerated the speed of electronic product replacement, and led to the continuous growth of the number of obsolete and abandoned electronic products [1]
When only a recycling center has fairness concerns, it will lead to the reduction of the recycling price and transfer price of offline channels, and the profits of the entire supply chain system
Whether it is for a recycling center or third-party recyclers (TPR), a lower level of fairness concern coefficient has a stronger impact on pricing and revenue than at high levels

Summary

Introduction

The continuous innovation of electronic technology and consumers’fanatical pursuit of a new generation of electronic products have accelerated the speed of electronic product replacement, and led to the continuous growth of the number of obsolete and abandoned electronic products [1]. In the four years from 2014 to 2018 alone, the number of waste electrical and electronic equipment (WEEE) in the world increased from 41.8 million tons to 50 million tons, and a “garbage-besieged city” became a trend of globalization [2]. Under such a grim reality, China’s recycling enterprises, while retaining the traditional offline recycling channels with low recycling volume, logistics efficiency, and recycling conversion rates, combine internet technology with garbage recycling and actively develop online recycling channels where websites and mobile phone applications directly contact and trade with consumers. Public Health 2019, 16, 1657; doi:10.3390/ijerph16091657 www.mdpi.com/journal/ijerph

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