Differential Pricing Strategy And Coordination Of Closed-loop Supply Chain

Further development of economic globalization and informationization, and theadvocacy of establishing resources-conserving as well as environmentally-friendlysociety, make people start to study reverse logistics, especially remanufacturing inclosed-loop supply chain. Enterprises are attaching more and more importance torecycling and remanufacturing under the pressure of environmental policies. For onething, they can get good reputation by doing so; for another, costs could be decreased,thus increasing profits. As it stands, the research on closed-loop supply chain ismeaningful, theoretically and practically. Although relevant studies abound recently,their hypotheses neglect the reality and asymmetric information. Specifically,customers’ feeling and recognition to new products and remanufacturing productswould be different even if they could be produced to be the same. Besides, enterpriseswould tell lies in terms of costs so as to get more money.Therefore, we posit that the closed-loop supply chain system comprises of onemanufacturer, one retailer and customers; meanwhile retailer is responsible for therecycling process; new products and remanufacturing products could be mutuallysubstituted with different price for whole sailing, retailing and recycling. Throughconstructing model, the differential pricing strategies under symmetric andasymmetric information decision making are given. Also, the revenue sharing contractis introduced to coordinate members in closed-loop supply chain after comparison ofcorrespondent profits. Finally, a numerical example is presented to illustrate theproposed model, analyzing how the substituted relation between new products andrecycled products impacts profits and how to coordinate the closed-loop supply chainsystem.