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

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.

Pricing Policies of Green Dual-Channel Supply Chain with Fairness Concerns and Altruistic Preferences Based on Consumers’ Environmental Awareness and Channel Preference

“…Fairness preferences, including fairness concerns and altruistic preferences, have become an integral part of supply chain connections and activities [ 59 , 60 , 61 ]. Fairness concern issues have been considered in supply chain models in plenty of studies.…”

Reverse Logistics Applied to E-Commerce: A Systematic Literature Review on Methods, Applications, and Trends for a Virtual Sustainable Market / Logística Reversa Aplicada Ao Comércio Eletrônico: Uma Revisão Sistemática Da Literatura Sobre Métodos, Aplicações E Tendências Para Um Mercado Virtual Sustentável

“…Finally, in the seventh article, Wu et al (2019) applied the adapted Stackelberg Game method, which was developed in 1943 by Heinrich von Stackelberg (Ferrara et al, 2017), in a Dual-channel Reverse Supply Chain (DRSC) to determine a balanced price strategy between direct recycling centers and third parties. This strategy was assumed because the destination process of returning goods from online and offline markets provided different profits to these agents of the reverse chain.…”

“…Finally, Wu et al (2019) used a subjective concept of justice, which represented the sensation of online and physical recyclers regarding the ideal supply chain price and revenue, to understand the impact of their study on the supply chain, however, they restricted the analysis to a reverse operation that disregards different degrees of deterioration of returned products.…”

Recycling Performance of the Tire Remanufacturing with Production Capacity Constraints considering Carbon Tax and Technology Subsidy

“…Sometimes remanufacturing is unavoidable for a manufacturer when it has an imperfect production process for assembled products [12]. In a closedloop remanufacturing supply chain, scholars have investigated the various pricing strategy between remanufactured and new products [13,14].…”