Considering Consumer Quality Preferences, Who Should Offer Trade-in Between Manufacturer and Retail Platform?

The trade-in service can enhance product sales and increase consumer loyalty; however, heterogeneity in consumer quality preferences significantly influences the provision and implementation of trade-in activities. By constructing a dynamic dual-supply chain model, this study examines the optimal choices for trade-in providers and the impact of consumer quality preferences on mode selection. The findings indicate that the decision of who should provide the trade-in service largely depends on the product’s quality decay rate. When the quality decay rate is low, collaboration between the manufacturer and the retail platform favors manufacturer-led trade-in service. Conversely, when the quality decay rate is high, both parties tend to fall into a prisoner’s dilemma, each preferring to dominate the trade-in process independently. Notably, as the share of pragmatic consumers increases, both sides of the supply chain are more inclined to prefer the manufacturer offering trade-in service. In our extended research, we found that the influence of government subsidies on mode selection primarily depends on the price discounts provided by the dominant party in trade-in arrangements within each mode. We also considered scenarios with asymmetric net residual values of recovered products, and the results robustly validate the stability of our core findings.