Remanufacturing in a competitive market: A closed-loop supply chain in a Stackelberg game framework

In this work, we study a closed-loop supply chain with remanufacturing in a competitive market, where the supply chain is a price taker. A Stackelberg game framework is considered, where a manufacturer (leader) has sufficient channel power over a retailer (follower). We develop analytical models to show that a closed-loop supply chain with remanufacturing in a competitive market can achieve the same return rate as that in the centrally coordinated channel by employing a contract between the manufacturer and the retailer. The contract consists of a wholesale price, and a progressive transfer price scheme with additional allowances (or charges) for the returned products. Our models also take into account the effect of green initiatives on consumers’ purchase intention by relating the green achievement from remanufacturing to consumer demand. In practice, our models can be directly applied to a closed-loop supply chain with remanufacturing in a competitive market.