Coordination in Closed-loop supply chain with price-dependent returns

Talat Genc and Pietro De Giovanni ()
Additional contact information
Pietro De Giovanni: Department of Operations Management, ESSEC Business School, Paris, France

No 1901, Working Papers from University of Guelph, Department of Economics and Finance

Abstract: This paper proposes two Closed-loop Supply Chain (CLSC) games in which a manufacturer sets some green activity programs efforts and a retailer sets the selling price. Both strategies influence the return rate, which is a state variable. The pricing strategy plays a key role in the identification of the best contract to achieve coordination as well as in achieving environmental objectives. The pricing strategy influences the return rate negatively, as consumers delay the return of their goods when the purchasing (and repurchasing) price is high. We then compare a wholesale price contract (WPC) and a revenue sharing contract (RSC) mechanism as both have interesting pricing policy implications. Our result shows that firms coordinate the CLSC through a (WPC) when the sharing parameter is too low while the negative effect of pricing on returns is too severe. In that case, the low sharing parameter deters the manufacturer to accept any sharing agreements. Further, firms coordinate the CLSC when the sharing parameter is medium independent of the negative impact of pricing on returns. When the sharing parameter is too high the retailer never opts for an RSC. We find that the magnitude of pricing effect on returns determines the contract to be adopted: For certain sharing parameter, firms prefer an RSC when the price effect on return is low and a WPC when this effect is high. In all other cases, rms do not have a consensus on the contract to be adopted and coordination is then not achieved.

Keywords: Closed-Loop Supply Chain; Dynamic return rate; Coordination; Wholesale price contract; Revenue sharing contract. (search for similar items in EconPapers)
JEL-codes: D24 L1 M11 (search for similar items in EconPapers)
Pages: 27 pages
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://www.uoguelph.ca/economics/repec/workingpapers/2019/2019-01.pdf (application/pdf)

Related works:
Chapter: Coordination in Closed-Loop Supply Chain with Price-Dependent Returns (2020)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:gue:guelph:2019-01

Access Statistics for this paper

More papers in Working Papers from University of Guelph, Department of Economics and Finance Contact information at EDIRC.
Bibliographic data for series maintained by Stephen Kosempel ().