Decision-making of an authorized remanufacturing closed-loop supply chain under fairness concerns

This paper studies optimal decisions in an authorized remanufacturing closed-loop supply chain consisting of a manufacturer, a fairness concerned retailer, and a fairness concerned authorized third-party remanufacturer. We develop two Stackelberg game models based on the retailer's different attitudes toward fairness concerns of the third party: the retailer considers the fairness concerns of the third party (model Y); the retailer does not consider the third party's fairness concerns (model N). We conduct numerical analysis to analyze the impact of two members' fairness concerns on optimal solutions. Our results are as follows: (1) The manufacturer will lower the wholesale price and authorization fee to cope with the fairness concerns. The retailer's disregard for third party's fairness concerns exacerbates the detrimental effects of fairness concerns on the manufacturer. (2) The increase in the retailer's fairness concerns promotes the quantity of remanufactured products and reduces the quantity of new products, whereas the increase in the fairness concerns of third party promotes the quantity of new products and suppresses the production of remanufactured products. (3) The fairness concerns of the retailer and third party are unfavorable to the manufacturer, while beneficial to two fairness concerned members' profits. (4) If the retailer seeks to maximize utility, it will choose not to consider the fairness concerns of the third party. Whereas if the retailer pursues profit maximization, it will consider the fairness concerns of the third party while maintaining a high degree of fairness concerns. (5) The environmental performance in model N is better, except when the remanufactured product's unit environmental impact is large and the third party has a sufficiently high level of fairness concerns relative to the retailer.