Study On Recycling Mode Of Closed-loop Supply Chain Considering Fairness Concerns

With the growing awareness of environmental protection and pollution increasingly strengthened, people and companies are paying more attention to the closed-loop supply chain management. At present, the study of closed-loop supply chain are mostly based on the assumption of Homo Economics. But with the emergence and development of Behavioral Economics, psychological and behavioral factors also have had a significant impact on the members’decision. Therefore, Behavioral Economics and Operations Management, an interdisciplinary research has become a new hot spot. It focuses on one of the social preferences-fairness concern in closed-loop supply chain and analyzes the effect of members’ fairness concern on price strategy in closed-loop supply chain under the three recovery modes.After summarizing the existing literature about the closed-loop supply chain and fairness concern, then it first introduces the concept of logistics and transport costs, analyzes and compares the optimal pricing in the closed-loop supply chain with and without fairness concern under the manufacturer recycling and the retailer recycling. Studies have shown that: either the manufacturer or retailer recycling, the manufacturer’s optimal wholesale price increases with the manufacturer’s fairness concern and decreases with the retailer’s fairness concern. However, the retailer’s optimal retail price always increases with the manufacturer’s fairness concern and the retailer’s fairness concern, then the fairness concern is more favorable to the retailer. When the manufacturer directly recovered, the wholesale price is less than other case. However, regardless of the manufacturer or retailer recycling, the retail price remains unchanged, thereby the retailer can get more profit in the forward logistics supply chain when the manufacturer recycles directly. But when the retailer is responsible for the recovery, the retailer makes up for the profit decline in its reverse logistics supply chain, therefore, whether the manufacturer or retailer recycles, they have the same profit.Subsequently, it is not limited to the single recycling channel mode and extends to the mixed recycling channel, then it discusses the fairness concern how to affect the pricing strategy and to explore the role of government subsidies for recycling incentives. Research shows that:government subsidies have the incentive effect on the manufacturer’s and the retailer’s recycling price. When the government provides more subsidies, the manufacturer and the retailer are more willing to improve the recycling price to attract more consumers to return used goods. However, the manufacturer’s recycling subsidy decreases with the government’s recycling subsidy. As the government subsidy increases, the manufacturer will reduce the subsidies to the retailer to maximize its’ own interests. It also finds that the fairness concern has no effect on the manufacturer’s recycling price. With the increase of manufacture’s fairness concern and the decrease of retailer’s fairness concern, the manufacturer reduces the recycling subsidy. But, the retailer always decreases the recycling price when the manufacturer and the retailer are fairness concerned. In a mixed recycling channel, the recycling price and the recycling subsidy is also affected by the product fitting degree. When the product fitting degree is a great, the manufacturer and the retailer are no longer willing to recycle, then the closed-loop supply chain collapses. It tells us that legitimate price competition helps to improve interests and the degree of social protection, but unfair competition will only lead to a lose-lose.Finally, it gives the summary of research result and points out the shortcomings and possible future directions of research studies. Conclusions of this study enriches the theory of closed-loop supply chain management, provides targeted recommendations in the forward and reverse logistics supply chain for enterprises and points out some meaningful suggestions to help the government to encourage the consumers to return used goods.