Research On Price Of The Closed-loop Supply Chain Under Asymmetric Information

Concern is growing over resource and environment issues which aregenerated during rapid social and economic development. Aiming at thesustainable development of economy and environment, scholars abroadraised a concept called Closed-loopsupply chain. The production practicereveals that such a new theory can bring benefits as well as reputations ofgreeninitiative to companies and firms. The recycling of the trash willreduce the production cost and at the same time raise profits for thecompanies. It is the price that accounts in products sales.In the reality of fast global economic and information technologicaldevelopment, it is hard for a single enterprise to successfully join in theintense market competition. As a result, the trend for global economicdevelopment becomes the competition between the supply chains whichneed the sharing of resource and the close cooperation among each nodemember of the supply chain. Nevertheless, the members at the node positionare comprised of independent enterprises whose decisions and informationare separated from each other based on the maximization of their profits.This fact leads to a decline of the whole efficiency of the supply chain.Information asymmetry is the major problem of the supply chain.Based on such a reality, this paper proposed a pricing strategy forinformation-asymmetric closed-loop supply chain with a focus on thetrading relationship between production supplier and the retail distributors(two essential node members in the supply chain). And there is anillustration of their typical activities and upstream and downstreamrelationship in the chain. The model is built on classical hypothesis todiscuss the optimal pricing and the gross system profits during thecompetition of production supplier and the retail distributors by quantitativeanalysis. In addition, the paper compared the pricing strategy undercentralized decision-making as well as decentralized decision-making andinformation asymmetry as well as information symmetry. The researchshows, in the closed-loop supply chain, profits of the system and of the bothsides under decentralized and dependent decision making are lower than thecentralized one for the production supplier and the retail distributors. Thegross profits of the closed-loop supply chain will not be unable to reach themaxim level only if the decisions are made by not catering for the otherparty’s interests.The both sides need to coordinate with each other indecision-making for the target of improving system profits.