Research on Closed-Loop Supply Chain with Competing Retailers under Government Reward-Penalty Mechanism and Asymmetric Information

Xiao-Qing Zhang,Xi-Gang Yuan,Da-Lin Zhang

doi:10.1155/2020/7587453

Abstract

In manufacturer-led closed-loop supply chain (CLSC) with two competing retailers, the retailer-1 recycles WEEE whose fixed recycling cost is asymmetric information. Using dynamics game theory and principal-agent theory, three dynamic game models are built including (1) benchmark model without reward-penalty mechanism (RPM); (2) decentralized model with carbon emission RPM; (3) decentralized model with carbon emission RPM and recovery rate RPM. This paper discusses the influence of RPM and retailers competition on the CLSC and members benefits. The results show that (1) the carbon emission RPM increases retail price, but decreases the WEEE recycling motivation usually. On the contrary, the recovery rate RPM guides WEEE recycling and lowers the retail price effectively. (2) In any case, the retailer-1’s profit is higher than that of the retailer-2; apparently it suggests that the retailer recycling WEEE gains competitive advantages. Furthermore, both the recovery rate RPM and retailers competition are beneficial to improve the competitive advantage. The relationship between two retailers’ retail price is affected by many complicated factors. (3) The WEEE buyback price and WEEE recovery rate with high fixed recycling cost (H-type) are always higher than that of low fixed recycling cost (L-type), respectively, which means that the H-type fixed recycling cost has scale advantages; the greater the reward-penalty intensity and the fiercer the competition, the more obvious the scale advantages under certain condition. (4) The retailers’ competition can not only guide WEEE recycling but also improve retailers’ profits. Meanwhile, the impact of competition on the manufacturer is related to RPM, but the fierce competition decreases the manufacturer’s profit.

Highlights

Due to the development of the economy and technology, the speed of the products upgrading is accelerated; as a result, more and more waste products are produced, this phenomenon is prominent in the electrical and electronic industry
Both the recovery rate reward-penalty mechanism (RPM) and retailers competition are beneficial to improve the competitive advantage. e relationship between two retailers’ retail price is affected by many complicated factors. (3) e Waste Electrical and Electronic Equipment (WEEE) buyback price and WEEE recovery rate with high fixed recycling cost (H-type) are always higher than that of low fixed recycling cost (L-type), respectively, which means that the high fixed recovery cost type (H-type) fixed recycling cost has scale advantages; the greater the reward-penalty intensity and the fiercer the competition, the more obvious the scale advantages under certain condition. (4) e retailers’ competition can guide WEEE recycling and improve retailers’ profits
For improving the WEEE recovery rate and restricting carbon emissions of closed-loop supply chain (CLSC), we introduce the recovery rate RPM and the carbon emissions RPM into the CLSC, respectively

Summary

Introduction

Due to the development of the economy and technology, the speed of the products upgrading is accelerated; as a result, more and more waste products are produced, this phenomenon is prominent in the electrical and electronic industry. Yu et al [24] discussed the WEEE recycling and disposal decisionmaking problem guided by the government, built four recycling decision-making models with recycling subsidy incentive according to different recycling responsibility subjects, and analyzed the impact of subsidy on each recycling decision using the numerical simulation method He et al [25] indicated that the government’s environmental policies increase the recycling proportion, but strengthen the reverse supply chain bullwhip effect. Based on the above research, Gong and Ge [41] studied the coordination mechanism of reverse supply chain under government guidance, assuming that both the retailers’ operating cost and demand of remanufactured products are all asymmetric, they discussed the optimal pricing strategies under the situation of government’s nonparticipation, and government reward retailers and manufacturers respectively. We can see the research about government RPM under asymmetric information is mostly limited to the case of a single nodal enterprise except for Zhang et al [18]

Assumptions and Notations

Result

Numerical Analysis

Findings

Conclusion and Future Research