Research On Pricing And Coordination Strategy Of Closed - Loop Supply Chain Considering Fair Concern And Government Subsidy

In recent years, paying attention to the environmental protection and people’s livelihood increasingly, the government has rolled out some related policies, such as government subsidies and other incentives to promote the development of circular economy. More and more companies have paid attention to the recycling of waste products for remanufacturing, join to the closed-loop supply chain. However, each member of the closed-loop supply chain is an independent economic entity, inevitably have conflict of interests, lead to the imbalance of the closed-loop supply chain systems, therefore, it is necessary to design a reasonable coordination mechanism. Current research on closed-loop supply chain pricing and coordination strategy is mostly based on the assumption of decision makers completely rational, however, a large number of scientific experiments showed that rational people are limited and there are many behavior tendency, particularly sensitive to the unfair phenomenon, when they feel injustice, they willing to sacrifice their own interests to punish the other party, namely has the tendency to fairness concerns. The research at home and abroad for considering fairness concern and government subsidies of closed-loop supply chain pricing and coordination strategy is still in its preliminary stage, relevant literatures are less.On the basis of above considerations, this paper supported by quantitative and qualitative analysis method, respectively discusses eleven kinds of manufacturer-leading, retailer-leading and third-party-leading closed-loop supply chain decision models under the unified pricing and differential pricing with the consideration of fairness concern and the incentive mechanism of government subsidy, analyzes the impact of fairness concerns coefficient and government subsidies on the optimal price, optimal recovery rate, channel member’s profit(utility), and total profit of the system, and optimal solution of each dominant model is analyzed by comparison and numerical simulation, finally uses improved two-tariff contract design the appropriate coordination mechanism to solve distributed decision-making mode of "double marginal effect" problem, has certain theoretical and practical significance.In this paper, the research results show that:1) The weak member’s fairness concerns will make him grab part profits of the leader to improve its own income distribution ratio in the channel.2) The government subsidies can effectively reduce the retail price of the products, expanding market demand, increases consumer welfare, product recovery rate, profits(utility) of channel member, and the total channel profits.3) Manufacturer-leading and retailer-leading closed-loop supply chain is superior to the third-party-leading, the third-party-leading closed-loop supply chain’s collaboration efficiency is worst, not only failing to make the system more efficient, but also severely disrupted the traditional supply chain’s normal operation, fairness concerns behavior make it more worse.4) Each channel members have enthusiasm to participate in recycling of waste products under uniform pricing, but under differential pricing manufacturers and retailers do not have the enthusiasm, so it need to design a reasonable incentive mechanism, and the government subsidies can effectively realize the goal of incentives in the closed-loop supply chain.5) We can use the improved two-tariff contracts to coordinate the decentralized decision-making closed-loop supply chain based on not reduce the fairness concerners’ s utility and other channel members profits, thus improve the channel leader and fairness concerner’s profits and maximize customer benefits, make the system profit to centralized decision-making level, realize the pareto improvement and the efficient operation of closed-loop supply chain.