Effects of Network Externalities and Recycling Channels on Closed-loop Supply Chain Operation Incorporating Consumers’ Dual Preferences

Consumers’ awareness of environmental protection is gradually strengthened, and they often consider environmental protection characteristics of products during purchasing products. Based on the characteristic of consumers’ dual preferences for product quality and environmental friendliness, this paper constructs a novel closed-loop supply chain with network externalities for new products and remanufactured products under different waste product recycling channel strategies. It discusses the influence of product recycling channel strategies and network externalities on the optimal decision of the company. By establishing the Stackelberg game model, the analysis found that the retail price of new products and remanufactured products is not affected by network externalities and recycling channel strategies, even if the wholesale price of remanufactured products increases with the influence of network externalities. The changing trend of market demand for new products and remanufactured products is different between products with network externalities and without network externalities. When the cost of remanufactured products is within certain range, the existence of network externalities makes the market demand for new products and remanufactured products increase simultaneously. Our study also found that even if products have positive network externalities that increases consumer utility, when the cost of remanufactured products is outside certain range, the company’s profit will be higher when products have no network externalities than that when products have network externalities.