Reverse logistics pricing strategy for a green supply chain: A view of customers' environmental awareness

• Published in: International journal of production economics Vol. 217; pp. 197 - 210
• Main Authors: Chen, Daqiang, Ignatius, Joshua, Sun, Danzhi, Zhan, Shalei, Zhou, Chenyu, Marra, Marianna, Demirbag, Mehmet
• Format: Journal Article
• Language: English
• Published: Elsevier B.V 01.11.2019
• Subjects: Cooperative game; Customer environmental awareness; Green supply chain; Nash equilibrium; Reverse logistics pricing strategy; Stackelberg equilibrium; Reverse logistics pricing strategy; Nash equilibrium; Customer environmental awareness; Stackelberg equilibrium; Green supply chain; Cooperative game
• ISSN: 0925-5273; 1873-7579
• DOI: 10.1016/j.ijpe.2018.08.031

The effectiveness of a reverse logistics strategy is contingent upon the successful execution of activities related to materials and product reuse. Green supply chain (GSC) in reverse logistics aims to minimize byproducts from ending up in landfills. This paper considers a retailer responsible for recycling and a manufacturer responsible for remanufacturing. Customer environmental awareness (CEA) is operationalized as customer word-of-mouth effect. We form three game theoretic models for two different scenarios with different pricing strategies, i.e. a non-cooperative pricing scenario based on Stackelberg equilibrium and Nash equilibrium, and a joint pricing scenario within a cooperative game model. The paper suggests that stakeholders are better off making their pricing and manufacturing decision in cooperation. •Reverse logistics of a green supply chain with environmentally-conscious customers is addressed.•Customer word-of-mouth effect is taken into account.•Two different pricing strategies and three game theoretic models have been derived and compared.•Results indicate customer environmental awareness has positive effects on revenues.