A Game Model for Pricing in Bertrand Closedloop Supply Chain Systems

Abstract

Abstract: The operation of reverse supply chain is discussed in this paper. Based on the Bertrand duopoly pricing game, a game model is developed for a closedloop supply chain composed of a supplier and two oligopoly retailers. With this model, the pricing mechanism for wholesale, retail, and recycling is analyzed under both centralized and decentralized decision making modes. Also, by using the model, the relationship between the supply chain profit and the product replacement rate is investigated. Based on the analysis, a twostage quantity discount policy in pricing is proposed such that the performance is improved in the sense of Pareto optimization. The range of discount and subsidy rates is given for both centralized and decentralized modes. The results obtained provide the basis for establishing the theory of closedloop supply chain system.

Key words: closed-loop supply chain, pricing game, Nash equilibrium, reverse logistics

Gao Peng, Lu Yumei. A Game Model for Pricing in Bertrand Closedloop Supply Chain Systems[J]. Industrial Engineering Journal , 2012, 15(3): 29-34.

References

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