Government Reward-Penalty Mechanism in Dual-Channel Closed-Loop Supply Chain

Haitao Chen, Zhaohui Dong and Gendao Li
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Haitao Chen: School of Management, Jilin University, Changchun 130015, China
Zhaohui Dong: School of Management, Jilin University, Changchun 130015, China
Gendao Li: School of Economics and Management, Changchun University of Science and Technology, Changchun 130000, China

Sustainability, 2020, vol. 12, issue 20, 1-15

Abstract: This study establishs a dual channel closed-loop supply chain (CLSC) model under a government–penalty mechanism (RPM) consisting a dual-channel manufacturer, a retailer, and the government. We consider a Stackelberg game between the manufacturer and the retailer, and the government rewards or punishes manufacturers on the basis of the collection rate of used products. This paper analyzes the influence of government RPM on the optimal decisions, the relationship between the two sales channels, and the total social welfare of the supply chain system. We find that the government RPM can improve the stability of the dual-channel supply chain and the collection rate of the used products. Moreover, we are the first to provide a method of deriving the optimal government RPM through a numerical example.

Keywords: dual channel; closed-loop supply chain; reward–penalty mechanism; game theory; pricing strategies (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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