Collusion or Not: The optimal choice of competing retailers in a closed-loop supply chain

Qifei Wang, Xianpei Hong, Gong, Yeming (Yale) and Chen, Wanying (Amanda)

International Journal of Production Economics, 2020, vol. 225, issue C

Abstract: While previous studies overlook the collusive behavior of retailers under bidirectional competition, we study a closed-loop supply chain (CLSC) consisting of one manufacturer and two competing retailers whose competition exists in the forward and reverse channels. Considering the retailers' potential collusive behavior and the upstream manufacturer's interactive decisions, we build three two-tier game models: Stackelberg-collusion model, Stackelberg-Nash model, and Stackelberg-Stackelberg model. We first obtain the equilibrium decisions of the manufacturer and the retailers in the three models. Furthermore, we investigate whether collusion is beneficial to the two retailers. We find that the retailers' collusion always brings remarkable profit improvement to them as a whole, while the smaller retailers may suffer severe profit loss. A profit-sharing contract is, therefore, designed to guarantee that each retailer can gain more profit by collusion. We also compare the environmental benefit and social welfare among the three models and find that collusion may do harm to the environment or social welfare compared with other models.

Keywords: Supply chain management; Recycling competition; Demand competition; Collusion; Closed-loop supply chain (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (14)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:proeco:v:225:y:2020:i:c:s0925527319304219

DOI: 10.1016/j.ijpe.2019.107580

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