The impacts of subsidy policies and transfer pricing policies on the closed-loop supply chain with dual collection channels

Abstract

This paper formulates Stackelberg game models to analyze the optimal pricing and recycling policies for a closed-loop supply chain with retailer and third party dual collection channels, in which the transfer prices paid by the manufacturer to the two recyclers are either uniform or different and government subsidy is provided with either the manufacturer or the two recyclers. By doing system comparisons and numerical examples, this paper explores the effects of subsidy policies and transfer pricing policies from the perspectives of the customers, the environment and the members. The results show that the usage of either remanufacturing or recycling subsidy would stimulate the consumption, increase the recovery and improve the members’ profits. Moreover, it is beneficial for the customer, the manufacturer and the retailer when different transfer prices are paid to the two recyclers for collecting used products, and in contrast, it is beneficial for the environment and the third party when uniform transfer prices are paid to the two recyclers for collecting used products. Due to the manufacturer’s dominant position, the supply chain is more willing to collect used products from the two recyclers with different transfer prices. Finally, the effectiveness of subsidy policies on the retail price, the total collection rate and the members’ performance is associated with the size of the subsidy, while is unrelated with the type of the subsidy.