Pricing Decisions in a Competitive Closed-Loop Supply Chain with Duopolistic Recyclers

Abstract EN

In this study, we consider a three-echelon closed-loop supply chain consisting of a manufacturer, a collector, and two duopolistic recyclers.

In the supply chain, the collector collects end-of-life products from consumers in the market.

Then, both recyclers purchase the recyclable waste from the collector, and each recycler turns them into new materials.

The manufacturer has no recycling facilities; therefore, the manufacturer only purchases the recycled and new materials for its production from the two recyclers.

Under this scenario, price competition between recyclers is inevitable.

With two pricing structures (Nash and Stackelberg) of the leaders group and three competition behaviors (Collusion, Cournot, and Stackelberg) of the followers group, we suggest six different pricing game models.

In each of them, we establish a pricing game model among the members, prove the uniqueness of the equilibrium prices of the supply chain members, and discuss the effects of competition on the overall supply chain’s profitability.

Our numerical experiment indicates that as the price competition between recyclers intensifies, the supply chain profitability decreases.

Moreover, the greater the recyclability degree of the waste is, the higher the profits in the supply chain become.