Decision-Making and Contract Coordination of Closed-Loop Supply Chain with Dual-Competitive Retail and Recycling Markets

The closed-loop supply chain (CLSC) plays an important role in reducing carbon emissions and effectively utilizing the residual value of used products. Sales competition and recycling rivalry are critical factors affecting the operation of CLSC. In this paper, we consider a CLSC system consisting of a single manufacturer, n retailers (where n≥2) and m third-party recyclers (where m≥2). The study constructs a Stackelberg game model with the manufacturer as a leader, and analyzes the impacts of retail competition and recycling rivalry on the decision-making and profits of both node enterprises and the supply chain system, and proposes a linear transfer-payment contract to coordinate the CLSC. Numerical analyses are conducted to visualize the effects of competition on the decisions and profits. The key findings are as follows: (1) In the centralized system, inter-retailer competition reduces optimal order quantities but does not affect optimal retail prices. In the decentralized system, however, it decreases both optimal order quantities and retail prices. (2) Rivalry among recyclers reduces their optimal recycling volumes but does not affect their optimal recycling prices in the centralized system. In the decentralized system, however, such rivalry not only decreases recycling volumes but also increases optimal recycling prices. (3) The manufacturer's product wholesale price and used product recycling price remain independent of competitive interactions among retailers and recyclers in the decentralized system. (4) Competition among retailers and recyclers positively affects the profits of the CLSC and the manufacturer, but negatively impacts those of retailers and recyclers. (5) When the reward-penalty factors for product order and used product recycling fall within specific range, the linear transfer-payment contract can coordinate the CLSC in the presence of competition in both retail and recycling.