A Closed-Loop Supply Chain with Competitive Dual Collection Channel under Asymmetric Information and Reward–Penalty Mechanism

Abstract

Abstract:We investigate a closed-loop supply chain (CLSC) where the retailer and the third-party recycler compete against each other to collect waste electrical and electronic equipment (WEEE) given that collection effort is their private information. Using the principle-agent theory, we develop a CLSC model with dual collection channel without the government's reward-penalty mechanism (RPM). An information screening contract is designed for the manufacturer to attain real information on collection effort levels; meanwhile, the optimal decision-making results of other decision variables are derived. Next, we take RPM into account to further examine the efficacy of the government's guidance mechanism in improving collection rate and profits of CLSC members. Our results indicate that (i) the collection competition reduces the total collection quantity and the expected profits of all the CLSC members without RPM; (ii) all CLSC members' expected profits are improved if both two collection agents select a high collection effort level without and with RPM; (iii) RPM increases buyback price, collection price, collection quantity, and franchise fee but decreases wholesale price and retail price; with the reward-penalty intensity increasing, the manufacturer's expected profit first decreases and then increases, while the expected profits of H-type retailer and H-type third-party recycler continue to increase. We find that RPM may ultimately stimulate the collection agents to collect more WEEEs, while the intense collection competition reduces the profits of CLSC members.

Research on Closed-Loop Supply Chain with Competing Retailers under Government Reward-Penalty Mechanism and Asymmetric Information

“…e result shows that the RPM is conducive to the reduction of retail price and the increase of recycling quantity. Under the situation of asymmetric information and RPM, Wang et al [17] discussed the dual competitive recycling channels which means both retailer and recycler participate in recycling in CLSC. Such studies on CLSC are limited to single-node enterprises.…”

“…In this section, we consider the electronic and electrical products CLSC with one manufacturer, two competing retailers (retailer-1 and retailer-2), and customers (see Figure 1) in a single production cycle [16][17][18]31]. e manufacturer is responsible for producing products and then selling them to retailers with the wholesale price p m ; finally, the retailers sell the products to the customers with the retail price p 1 and p 2 , respectively.…”

“…(5) To guarantee the economic significance of the model, we assume that the manufacturing cost with the new material is higher than the remanufacturing cost with the recycled WEEE material, and it can be expressed as c m > c r [14,18,43]; thus, the manufacturer would not use new material until the recycled WEEE material is used out [16][17][18]31]; Furthermore, we assume that the new products and remanufactured products are of the same quality [14,[16][17][18]43].…”

“…e CLSC usually faces the risk of asymmetric information [10,[16][17][18], such as the market demand, the recovery effort, and recovery amounts. In such scenarios, some information is only available to one member, and the other members have to make decisions based on limited information, which can result in the adverse selection and moral hazard.…”

Risk-Averse Facility Location for Green Closed-Loop Supply Chain Networks Design under Uncertainty

“…CLSC integrates the forward and reverse logistics and accomplishes a complete flow from supply to recovery. This emerging schema has contributed considerably to reducing waste [1,2]. Despite significant profits from CLSC, a derived challenge should be pointed out, namely that the structure of CLSC is more complicated than the traditional supply chain network.…”