Impacts of distributional and peer-induced fairness concerns on a closed-loop supply chain under dual-channel competition

This work explores the impacts of the distributional and peer-induced fairness concerns with both advantageous and disadvantageous inequities on a two-echelon closed-loop supply chain comprising a manufacturer and two downstream competitors who engage in forward and reverse channel competitions. Four complete information Stackelberg game models are formulated for different fairness concern considerations. The equilibrium results of these models are obtained through backward induction, and the impacts of the important parameters are examined through theoretical analyses. Numerical analyses are conducted to verify the theoretical results and sensitivity analyses are performed to verify the impacts of the key parameters. Some important findings are obtained. First, the manufacturer’s and the dominating competitor’s profits increase when considering peer-induced fairness concerns, and the downstream competitors sacrifice their profits to reduce the manufacturer’s profit when considering distributional fairness concerns. Second, the simultaneous consideration of distributional and peer-induced fairness concerns mitigates the downstream competitors’ profit losses under certain conditions. Finally, the peer-induced fairness concern consideration aggravates the reverse channel competition, resulting in the downstream competitors’ profit losses. This study provides insights into the complex influences of fairness concerns on the decisions in closed-loop supply chains.