IDEAS home Printed from https://ideas.repec.org/a/wly/mgtdec/v44y2023i1p399-415.html
   My bibliography  Save this article

Optimal joint trade‐in rebate strategies in a retailer‐led supply chain

Author

Listed:
  • Fei Tang
  • Ying Dai
  • Zu‐Jun Ma

Abstract

This study investigates the joint trade‐in rebate strategies in a supply chain with independent manufacturers selling substitutable products via a dominant retailer. We model their interplay as a Stackelberg game and analyze their joint trade‐in rebate decisions. We find that the differentiated trade‐in rebate scheme is better for the retailer, and the manufacturers cooperating in making their trade‐in rebate decisions can achieve win‐win results in most cases. However, replacement consumers could benefit from the retailer's uniform trade‐in rebate scheme and the manufacturers not cooperating in their trade‐in decisions. The latter is always more beneficial to the environment.

Suggested Citation

  • Fei Tang & Ying Dai & Zu‐Jun Ma, 2023. "Optimal joint trade‐in rebate strategies in a retailer‐led supply chain," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 44(1), pages 399-415, January.
    • Handle: RePEc:wly:mgtdec:v:44:y:2023:i:1:p:399-415
    DOI: 10.1002/mde.3689
    as

    Download full text from publisher

    File URL: https://doi.org/10.1002/mde.3689
    Download Restriction: no
    File URL: https://libkey.io/10.1002/mde.3689?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Ma, Wei-min & Zhao, Zhang & Ke, Hua, 2013. "Dual-channel closed-loop supply chain with government consumption-subsidy," European Journal of Operational Research, Elsevier, vol. 226(2), pages 221-227.
    2. Chen, Jen-Ming & Hsu, Yu-Ting, 2017. "Revenue management for durable goods using trade-ins with certified pre-owned options," International Journal of Production Economics, Elsevier, vol. 186(C), pages 55-70.
    3. Jiayi Joey Yu & Christopher S. Tang & Zuo-Jun Max Shen, 2018. "Improving Consumer Welfare and Manufacturer Profit via Government Subsidy Programs: Subsidizing Consumers or Manufacturers?," Manufacturing & Service Operations Management, INFORMS, vol. 20(4), pages 752-766, October.
    4. Fuqiang Zhang & Renyu Zhang, 2018. "Trade-in Remanufacturing, Customer Purchasing Behavior, and Government Policy," Manufacturing & Service Operations Management, INFORMS, vol. 20(4), pages 601-616, October.
    5. Chen, Xu & Luo, Zheng & Wang, Xiaojun, 2019. "Compete or cooperate: Intensity, dynamics, and optimal strategies," Omega, Elsevier, vol. 86(C), pages 76-86.
    6. Fan, Xiaojun & Guo, Xin & Wang, Shanshan, 2022. "Optimal collection delegation strategies in a retail-/dual-channel supply chain with trade-in programs," European Journal of Operational Research, Elsevier, vol. 303(2), pages 633-649.
    7. Yongbo Xiao & Sean X. Zhou, 2020. "Trade‐in for Cash or for Upgrade? Dynamic Pricing with Customer Choice," Production and Operations Management, Production and Operations Management Society, vol. 29(4), pages 856-881, April.
    8. Li, Kate J. & Xu, Susan H., 2015. "The comparison between trade-in and leasing of a product with technology innovations," Omega, Elsevier, vol. 54(C), pages 134-146.
    9. Madjid Tavana & Hannan Amoozad Mahdiraji & Moein Beheshti & Ali‐Asghar Abbasi Kamardi, 2020. "Optimal strategic alliance in multi‐echelon supply chains with open innovation," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 41(7), pages 1365-1384, October.
    10. Aditya Vedantam & Emre M. Demirezen & Subodha Kumar, 2021. "Trade‐In or Sell in My P2P Marketplace: A Game Theoretic Analysis of Profit and Environmental Impact," Production and Operations Management, Production and Operations Management Society, vol. 30(11), pages 3923-3942, November.
    11. Luo, Zheng & Chen, Xu & Chen, Jing & Wang, Xiaojun, 2017. "Optimal pricing policies for differentiated brands under different supply chain power structures," European Journal of Operational Research, Elsevier, vol. 259(2), pages 437-451.
    12. Choi, Tsan-Ming & Li, Yongjian & Xu, Lei, 2013. "Channel leadership, performance and coordination in closed loop supply chains," International Journal of Production Economics, Elsevier, vol. 146(1), pages 371-380.
    13. Xiao, Yongbo, 2017. "Choosing the right exchange-old-for-new programs for durable goods with a rollover," European Journal of Operational Research, Elsevier, vol. 259(2), pages 512-526.
    14. Tim Kraft & Gal Raz, 2017. "Collaborate or Compete: Examining Manufacturers' Replacement Strategies for a Substance of Concern," Production and Operations Management, Production and Operations Management Society, vol. 26(9), pages 1646-1662, September.
    15. Jiaru Bai & Shu Hu & Luyi Gui & Kut C. So & Zu‐Jun Ma, 2021. "Optimal Subsidy Schemes and Budget Allocations for Government‐Subsidized Trade‐in Programs," Production and Operations Management, Production and Operations Management Society, vol. 30(8), pages 2689-2706, August.
    16. Bin Liu & Gangshu (George) Cai & Andy A. Tsay, 2014. "Advertising in Asymmetric Competing Supply Chains," Production and Operations Management, Production and Operations Management Society, vol. 23(11), pages 1845-1858, November.
    17. Yong Liu & Qian Xu & Zhi‐yang Liu, 2020. "A coordination mechanism through value‐added profit distribution in a supply chain considering corporate social responsibility," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 41(4), pages 586-598, June.
    18. Per Joakim Agrell & Peter Bogetoft, 2017. "Decentralization Policies for Supply Chain Investments Under Asymmetric Information," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 38(3), pages 394-408, April.
    19. Hao Wu & Gangshu (George) Cai & Jian Chen & Chwen Sheu, 2015. "Online Manufacturer Referral to Heterogeneous Retailers," Production and Operations Management, Production and Operations Management Society, vol. 24(11), pages 1768-1782, November.
    20. Albert Y. Ha & Weixin Shang & Yunjie Wang, 2017. "Manufacturer Rebate Competition in a Supply Chain with a Common Retailer," Production and Operations Management, Production and Operations Management Society, vol. 26(11), pages 2122-2136, November.
    21. Aijun Liu & Dengxue Li & Miao Jie & Zengxian Li, 2022. "Coordination through revenue sharing contract in an E‐commerce supply chain with consumer preference," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 43(6), pages 2467-2479, September.
    22. Dou, Guowei & Choi, Tsan-Ming, 2021. "Does implementing trade-in and green technology together benefit the environment?," European Journal of Operational Research, Elsevier, vol. 295(2), pages 517-533.
    23. Zhao, Senlin & You, Zhuangzhuang & Zhu, Qinghua, 2021. "Quality choice for product recovery considering a trade-in program and third-party remanufacturing competition," International Journal of Production Economics, Elsevier, vol. 240(C).
    24. Nematollahi, Mohammadreza & Tajbakhsh, Alireza & Mosadegh Sedghy, Bahareh, 2021. "The reflection of competition and coordination on organic agribusiness supply chains," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 154(C).
    25. Hafezalkotob, Ashkan, 2017. "Competition, cooperation, and coopetition of green supply chains under regulations on energy saving levels," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 97(C), pages 228-250.
    26. Kaiying Cao & Tsan‐Ming Choi, 2022. "Optimal Trade‐in Return Policies: Is it Wise to be Generous?," Production and Operations Management, Production and Operations Management Society, vol. 31(3), pages 1309-1331, March.
    27. Ma, Peng & Gong, Yeming & Mirchandani, Prakash, 2020. "Trade-in for remanufactured products: Pricing with double reference effects," International Journal of Production Economics, Elsevier, vol. 230(C).
    28. Gérard P. Cachon & Martin A. Lariviere, 2005. "Supply Chain Coordination with Revenue-Sharing Contracts: Strengths and Limitations," Management Science, INFORMS, vol. 51(1), pages 30-44, January.
    29. Li, Yongjian & Wang, Kun & Xu, Fangchao & Fan, Chunxing, 2022. "Management of trade-in modes by recycling platforms based on consumer heterogeneity," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 162(C).
    30. Preyas S. Desai & Devavrat Purohit & Bo Zhou, 2016. "The Strategic Role of Exchange Promotions," Marketing Science, INFORMS, vol. 35(1), pages 93-112, January.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Wang, Wei & Feng, Lipan & Chen, Xiaoxu & Yang, Lei & Choi, Tsan-Ming, 2024. "Impacts of selling models: Who should offer trade-in programs in e-commerce supply chains?," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 186(C).
    2. Hu, Shu & Zhu, Stuart X. & Fu, Ke, 2023. "Optimal trade-in and refurbishment strategies for durable goods," European Journal of Operational Research, Elsevier, vol. 309(1), pages 133-151.
    3. Tang, Fei & Dai, Ying & Ma, Zu-Jun & Choi, Tsan-Ming, 2023. "Trade-in operations under retail competition: Effects of brand loyalty," European Journal of Operational Research, Elsevier, vol. 310(1), pages 397-414.
    4. Cao, Kaiying & Su, Yunyi & Han, Guoxin & Choi, Tsan-Ming, 2022. "Is it wise to offer rebates for unused extended warranties under trade-in programs in supply chains?," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 167(C).
    5. Li, Yongjian & Wang, Kun & Xu, Fangchao & Fan, Chunxing, 2022. "Management of trade-in modes by recycling platforms based on consumer heterogeneity," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 162(C).
    6. Dong, Rong & Wang, Nengmin & Jiang, Bin & He, Qidong, 2023. "Within-brand or cross-brand: The trade-in option under consumer switching costs," International Journal of Production Economics, Elsevier, vol. 255(C).
    7. Hu, Shu & Tang, Yanli, 2024. "Impact of product sharing and heterogeneous consumers on manufacturers offering trade-in programs," Omega, Elsevier, vol. 122(C).
    8. Cheng, Fei & Chen, Tong & Chen, Qiao, 2022. "Cost-reducing strategy or emission-reducing strategy? The choice of low-carbon decisions under price threshold subsidy," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 157(C).
    9. Li, Sijie & Zheng, Bin & Jia, Dongfeng, 2024. "Optimal decisions for hybrid manufacturing and remanufacturing with trade-in program and carbon tax," Omega, Elsevier, vol. 124(C).
    10. Dou, Guowei & Choi, Tsan-Ming, 2024. "Compete or cooperate? Effects of channel relationships on government policies for sustainability," European Journal of Operational Research, Elsevier, vol. 313(2), pages 718-732.
    11. Li, Yongjian & Feng, Lipan & Govindan, Kannan & Xu, Fangchao, 2019. "Effects of a secondary market on original equipment manufactures’ pricing, trade-in remanufacturing, and entry decisions," European Journal of Operational Research, Elsevier, vol. 279(3), pages 751-766.
    12. Ji, Jingna & Li, Tao & Yang, Lei, 2023. "Pricing and carbon reduction strategies for vertically differentiated firms under Cap-and-Trade regulation," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 171(C).
    13. Shengliang Zong & Chunyang Shen, 2023. "Decision-making and coordination in an e-commerce supply chain under channel selection," OPSEARCH, Springer;Operational Research Society of India, vol. 60(1), pages 326-369, March.
    14. Quan, Yuting & Hong, Jiangtao & Song, Jingpu & Leng, Mingming, 2021. "Game-theoretic analysis of trade-in services in closed-loop supply chains," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 152(C).
    15. Chakraborty, Abhishek & Mandal, Prasenjit, 2021. "Channel efficiency and retailer tier dominance in a supply chain with a common manufacturer," European Journal of Operational Research, Elsevier, vol. 294(1), pages 100-121.
    16. Abhishek Srivastava & Abhishek Chakraborty & Arqum Mateen, 2022. "Role of power imbalance on channel coordination under greening investments," OPSEARCH, Springer;Operational Research Society of India, vol. 59(4), pages 1522-1554, December.
    17. Zhao, Senlin & You, Zhuangzhuang & Zhu, Qinghua, 2021. "Quality choice for product recovery considering a trade-in program and third-party remanufacturing competition," International Journal of Production Economics, Elsevier, vol. 240(C).
    18. Xingchen Li & Jinxing Xie & Tingting Li, 2023. "Trade-in strategy for durable products in the presence of a peer-to-peer second-hand marketplace," Annals of Operations Research, Springer, vol. 326(1), pages 223-260, July.
    19. Cheng, Peiyue & Wang, Tingsong, 2023. "Optimizing the emission control policies and trade-in program effects: A carbon-constrained closed-loop supply chain network model," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 179(C).
    20. Kumar, Patanjal & Baraiya, Rajendra & Das, Debashree & Jakhar, Suresh Kumar & Xu, Lei & Mangla, Sachin Kumar, 2021. "Social responsibility and cost-learning in dyadic supply chain coordination," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 156(C).

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wly:mgtdec:v:44:y:2023:i:1:p:399-415. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: http://www3.interscience.wiley.com/cgi-bin/jhome/7976 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.