Abstract: A special closed-loop supply chain is discussed. In such a supply chain, under patent perfect market, retailers’ remanufacturing of patented products is authorized by the original manufacturer. For the case that difference exists between the new products and remanufactured products, game theory models are developed under both decentralized and centralized decision-making modes. With the models, manufacturer’s optimal wholesale price and patent licensing fee, retailer’s price difference between new and remanufactured products, and their profits are then found for both decision-making modes. Impacts of different parameter changes on pricing, patent licensing fee, and profits are also analyzed. It shows that system profit under decentralized decision-making is less than that under centralized decision-making. Therefore, a revenue sharing contract is presented to coordinate the supply chain.

Key words: closed-loop supply chain, patent licensing, differential pricing, revenue sharing contract