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Research on Closed-Loop Supply Chain Decision-Making in Different Cooperation Modes with Government’s Reward-Penalty Mechanism

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  • Quanxi Li

    (School of Management, Jilin University, Changchun 130022, China)

  • Haowei Zhang

    (School of Management, Jilin University, Changchun 130022, China)

  • Kailing Liu

    (School of Management, Jilin University, Changchun 130022, China)

Abstract

In closed-loop supply chains (CLSC), manufacturers, retailers, and recyclers perform their duties. Due to the asymmetry of information among enterprises, it is difficult for them to maximize efficiency and profits. To maximize the efficiency and profit of the CLSC, this study establishes five cooperation models of CLSC under the government‘s reward–penalty mechanism. We make decisions on wholesale prices, retail prices, transfer payment prices, and recovery rates relying on the Stackelberg game method and compare the optimal decisions. This paper analyzes the impact of the government reward-penalty mechanism on optimal decisions and how members in CLSC choose partners. We find that the government’s reward-penalty mechanism can effectively increase the recycling rate of used products and the total profit of the closed-loop supply chain. According to the calculation results of the models, under the government’s reward-penalty mechanism, the cooperation can improve the CLSC’s used products recycling capacity and profitability. In a supply chain, the more members participate in the cooperation, the higher profit the CLSC obtain. However, the cooperation mode of all members may lead to monopoly, which is not approved by government and customers.

Suggested Citation

  • Quanxi Li & Haowei Zhang & Kailing Liu, 2021. "Research on Closed-Loop Supply Chain Decision-Making in Different Cooperation Modes with Government’s Reward-Penalty Mechanism," Sustainability, MDPI, vol. 13(11), pages 1-22, June.
    • Handle: RePEc:gam:jsusta:v:13:y:2021:i:11:p:6425-:d:569210
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    2. Xiao Jiang & Qiang Hu & Tingyuan Lou & Wenjin Zuo & Jicai Li, 2023. "Impact of Government Environmental Regulations on Remanufacturing Supply Chain with Multi-Subject Responsibility for Recycling and Disposal," Mathematics, MDPI, vol. 11(8), pages 1-19, April.
    3. Huaixi Song & Quanxi Li & Kailing Liu & Yi Li, 2022. "The Recycling Strategy of Closed-Loop Supply Chain Considering CSR under the Government’s Reward–Penalty Policy," Sustainability, MDPI, vol. 14(21), pages 1-16, October.
    4. Wenbin Wang & Jie Guan & Mengxin Zhang & Jinyu Qi & Jia Lv & Guoliang Huang, 2022. "Reward-Penalty Mechanism or Subsidy Mechanism: A Closed-Loop Supply Chain Perspective," Mathematics, MDPI, vol. 10(12), pages 1-22, June.
    5. Yang Lv & Xinhua Bi & Quanxi Li & Haowei Zhang, 2022. "Research on Closed-Loop Supply Chain Decision Making and Recycling Channel Selection under Carbon Allowance and Carbon Trading," Sustainability, MDPI, vol. 14(18), pages 1-17, September.

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