Dynamic Pricing Game Under Different Channel Power Structures in a Closed-Loop Supply Chain

Abstract

The importance of closed-loop supply chains has been widely recognized both in academic communities and in industrial sectors. This paper starts from the traditional supply chains and the new self-supply chain of GREE to extract realistic problems, to mainly investigating two noncooperative dynamic pricing policies in a dual-channel closed-loop supply chain consisting of a manufacturer and a retailer. Then, it studies the influence of different channel power structures on dynamic decisions and their complexities. Furthermore, the reference price affects the purchase decisions of consumers. Therefore, the model takes into account the influence of reference price of the market demands. Results show that the manufacturer who opens up a direct channel can make a huge profit in the game. In the dynamic game evolution process, the game leader is in a more advantageous position when the system is in a stable region; once entering into the bifurcating region or chaotic region, the game follower needs to adjust his price to follow the leader’s decision in order to make a profit. In addition, the system’s stable region becomes smaller when the market demand becomes more sensitive to the difference between the reference price and the actual price. In this model, if the manufacturer acts as a leader, he is in a more advantageous position when the market is sensitive to channel competition in the stable stage while the result is opposite in the unstable stage.

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