CSR Remanufacturing Supply Chains under WTP Differentiation

Lili Dai, Tong Shu, Shou Chen, Shouyang Wang and Kin Keung Lai
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Lili Dai: Business School, Hunan University, Changsha 410082, China
Tong Shu: Business School, Hunan University, Changsha 410082, China
Shou Chen: Business School, Hunan University, Changsha 410082, China
Shouyang Wang: Academy of Mathematics and System Science, Chinese Academy of Sciences, Beijing 100190, China
Kin Keung Lai: College of Economics, Shenzhen University, Shenzhen 518060, China

Sustainability, 2020, vol. 12, issue 6, 1-19

Abstract: With the shortage of global resources and the call for sustainable development, the remanufacturing supply chain and the corporate social responsibility of enterprises have attracted extensive attention from scholars. This paper studies a manufacturer-retailer corporate social responsibility (CSR) remanufacturing supply chain in which the manufacturer collects the used products grounded in the willingness to pay (WTP) differentiation. Different from previous literature, this paper first adds WTP differences to the CSR remanufacturing supply chain. Next, we analyze the manufacturer exhibiting CSR activity by Stackelberg game theory in both centralized and decentralized models with a consideration of prices, recycling, consumer surplus, and profits for the chain players in the two models with different CSR ratios. Through calculation and analyses of the models, we note that the chain members have the best status when the consumers’ WTP for new and remanufactured products is within a threshold. Subsequently, we compare the optimal price decisions and the expected profits in the decentralized and centralized systems, and we find that the retail price, wholesale price, and recycling rate decrease with a rising CSR under WTP differentiation. The centralized retail price is lower than the decentralized one. Conversely, the profit is higher when the increment of demand is higher. On top of that, in common cases, the pure and total profits of manufacturing are ascending while the retailer’s profit is descending. We also find that the consumer surplus is increasing in two cases. Finally, to motivate the players in the supply chain to engage in CSR activity, we consider the revenue sharing contract. From the perspective of WTP differences, this paper studies CSR remanufacturing, which has certain influences on the sustainable development of the economy.

Keywords: willingness to pay; corporate social responsibility; remanufacturing supply chain; game theory (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2020
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