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Fair but Risky? Recycle Pricing Strategies in Closed-Loop Supply Chains

We argue that a Nash bargaining model with behavioral factors (i.e., fairness concern and risk aversion) should be introduced to the price strategizing process in the context of a closed-loop supply chain. We consider three different pricing models: The first is when both the manufacturer and the re...

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Detalles Bibliográficos
Autores principales: He, Jianhong, Zhang, Lei, Fu, Xiao, Tsai, Fu-Sheng
Formato: Online Artículo Texto
Lenguaje:English
Publicado: MDPI 2018
Materias:
Acceso en línea:https://www.ncbi.nlm.nih.gov/pmc/articles/PMC6313580/
https://www.ncbi.nlm.nih.gov/pubmed/30558220
http://dx.doi.org/10.3390/ijerph15122870
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author He, Jianhong
Zhang, Lei
Fu, Xiao
Tsai, Fu-Sheng
author_facet He, Jianhong
Zhang, Lei
Fu, Xiao
Tsai, Fu-Sheng
author_sort He, Jianhong
collection PubMed
description We argue that a Nash bargaining model with behavioral factors (i.e., fairness concern and risk aversion) should be introduced to the price strategizing process in the context of a closed-loop supply chain. We consider three different pricing models: The first is when both the manufacturer and the retailer have fairness concerns; the second is when both the manufacturer and the retailer have risk aversion; and the final is when the manufacturer has risk aversion but the retailer has both risk aversion and fairness concern. Then we examine the model with game theory. The results have shown that fairness and risk aversion change the optimal pricing strategy, which affects the expected profits of retailers and manufacturers. The impacts of two (relatively irrational) behavioral factors on the wholesale and retail prices of new products, the recycle price and recycle transfer price of the waste products, are not the same. For new products, the wholesale price is most affected by behavioral factors and the sales price scores second. For waste recycling products, the transfer price is most affected by behavioral factors and the recycle price scores second. When considering fairness and risk aversion in retail, fairness concern is good for both manufacturers and retailers. This innovative pricing strategy model adds implications for sustainability in supply chain operations.
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spelling pubmed-63135802019-06-17 Fair but Risky? Recycle Pricing Strategies in Closed-Loop Supply Chains He, Jianhong Zhang, Lei Fu, Xiao Tsai, Fu-Sheng Int J Environ Res Public Health Article We argue that a Nash bargaining model with behavioral factors (i.e., fairness concern and risk aversion) should be introduced to the price strategizing process in the context of a closed-loop supply chain. We consider three different pricing models: The first is when both the manufacturer and the retailer have fairness concerns; the second is when both the manufacturer and the retailer have risk aversion; and the final is when the manufacturer has risk aversion but the retailer has both risk aversion and fairness concern. Then we examine the model with game theory. The results have shown that fairness and risk aversion change the optimal pricing strategy, which affects the expected profits of retailers and manufacturers. The impacts of two (relatively irrational) behavioral factors on the wholesale and retail prices of new products, the recycle price and recycle transfer price of the waste products, are not the same. For new products, the wholesale price is most affected by behavioral factors and the sales price scores second. For waste recycling products, the transfer price is most affected by behavioral factors and the recycle price scores second. When considering fairness and risk aversion in retail, fairness concern is good for both manufacturers and retailers. This innovative pricing strategy model adds implications for sustainability in supply chain operations. MDPI 2018-12-14 2018-12 /pmc/articles/PMC6313580/ /pubmed/30558220 http://dx.doi.org/10.3390/ijerph15122870 Text en © 2018 by the authors. Licensee MDPI, Basel, Switzerland. This article is an open access article distributed under the terms and conditions of the Creative Commons Attribution (CC BY) license (http://creativecommons.org/licenses/by/4.0/).
spellingShingle Article
He, Jianhong
Zhang, Lei
Fu, Xiao
Tsai, Fu-Sheng
Fair but Risky? Recycle Pricing Strategies in Closed-Loop Supply Chains
title Fair but Risky? Recycle Pricing Strategies in Closed-Loop Supply Chains
title_full Fair but Risky? Recycle Pricing Strategies in Closed-Loop Supply Chains
title_fullStr Fair but Risky? Recycle Pricing Strategies in Closed-Loop Supply Chains
title_full_unstemmed Fair but Risky? Recycle Pricing Strategies in Closed-Loop Supply Chains
title_short Fair but Risky? Recycle Pricing Strategies in Closed-Loop Supply Chains
title_sort fair but risky? recycle pricing strategies in closed-loop supply chains
topic Article
url https://www.ncbi.nlm.nih.gov/pmc/articles/PMC6313580/
https://www.ncbi.nlm.nih.gov/pubmed/30558220
http://dx.doi.org/10.3390/ijerph15122870
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