Optimal decisions in a closed-loop supply chain: fairness concerns, corporate social responsibility and information value

This paper develops a series of two-echelon closed-loop supply chain (CLSC) game models in which the retailer acts as the Stackelberg leader of the channel power under the scenarios of information symmetry and information asymmetry. The manufacturer has fairness concern and undertakes corporate social responsibility (CSR) by recycling used products using the reverse channel. We aim to explore the impact of fairness concerns and information asymmetry on the performance of the CLSC. Under the information symmetry, we compare different models with fairness concerns and find that one participant’s unilateral fairness concern can be beneficial to her or his own interests but not to the other participant’s interests. That is, each participant is motivated to adopt his (her) own unilateral fairness concern while avoiding fairness concern of the other. The manufacturer’s CSR level is always negatively related to her fairness concern information. However, the fairness concern has mixed effects on unit wholesale price and retail price in the different models. Bilateral fairness concerns can lead the retailer to raise the retail price, but not always raise the manufacturer’s wholesale price. Under information asymmetry, we investigate the impact of asymmetric information on the performance of the CLSC and find that asymmetric information is not always beneficial to the manufacturer although she owns private information on fairness concern. In each scenario, when both participants are concerned with fairness, we find that under certain conditions the manufacturer’s CSR level is always positively related to the colleting rate, but her utility does not always increase with it. Finally, we evaluate the information value of fairness concerns to the channel participants and find that the information value is always positive for the retailer but may be negative for the manufacturer when the level of fairness concern is higher than a certain threshold.