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Pricing strategies in the competitive reverse supply chains with traditional and e-channels: A game theoretic approach

Ata Allah Taleizadeh and Razieh Sadeghi

International Journal of Production Economics, 2019, vol. 215, issue C, 48-60

Abstract: Increasing attention to sustainable development issues and competition between different supply chains are forcing the stakeholders to use different incentives to capture more market share. Collecting channels are one of the effective topics in the reverse competitive chains. Because of the importance of this issue, we consider two collecting reverse supply chains consist of a retailer and a manufacturer who compete together by proposing more rewards to the customers. One of these chains tries to facilitate the collecting process and obtain more market share by using the direct and traditional channels advantages. The other one uses only the traditional channel. Hence, the return rate of each channel not only depends on the self-reward but also is function of the cross-rewards suggested to the customer by the competitors in the other channels. The competitive environment in our model consists of internal and external competitions. Competition between two channels of one chain infers to internal competition, external competition that points out to competition among two supply chains. We apply three game theory structures to obtain the optimal channels rewards: Nash, Nash-Stackelberg-first supply chain, and Nash-Stackelberg-second supply chain. Finally, we comparing the results of decision variables and profit function of members under three structures through numerical analysis. Our numerical investigations show that e-channel because of less costly than traditional channel proposes more appropriate reward to customers, so this channel could obtain a more substantial share of the market. Moreover, the results reveal that highest return rate occurred under Nash scenario while Nash-Stackelberg-first supply chain and Nash-Stackelberg-second supply chain are the most economic scenarios for the first and the second supply chains, respectively.

Keywords: Reverse supply chain; Game theory; Channel competition; Pricing; E-channel; Sustainability (search for similar items in EconPapers)
Date: 2019
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Handle: RePEc:eee:proeco:v:215:y:2019:i:c:p:48-60