Analysis of Retailer’s Competitive Preference in Closed-Loop Supply Chain Under Different Recycling Channels

The competitive preference of a retailer is incorporated into the traditional closed-loop supply chain (CLSC) to investigate the performance of different recycling channels, that is, manufacturer recycling channel (Model M), retailer recycling channel (Model R) and third-party recycling channel (Model T). Viewing the manufacturer as a Stackelberg leader and the retailer as a Stackelberg follower, mathematical models within which the manufacturer considers and doesn’t consider retailer’s competitive preference under three recycling channels are constructed and the performance of the CLSC is investigated based on game theory. Through a comparative analysis, we find that all the channel members would suffer if retailer’s competitive preference is ignored. Therefore, the manufacturer as the channel leader should consider retailer’s competitive preference. Moreover, for a sufficiently large competitive preference parameter in Model R, the manufacturer’s profits could be lower when the manufacturer is the leader than when the manufacturer is the follower. Furthermore, we analytically reveal the nature of competitive preference. To alleviate the adverse impacts of competitive preference, we propose two-part tariff contracts for the manufacturer to coordinate the CLSCs under three recycling channel structures. As retailer’s competitive preference cannot be ignored, coordination is a relatively good strategy for the manufacturer to cope with retailer’s competitive preference.