Author(s)

Zhihchao Zhang, Mingdong Wan, Fang Chen, Xingxing Tang, Zhi Liu

Corresponding Author

Zhi Liu

Abstract

With the rapid development of e-commerce and technology, dynamic pricing, as an effective way to enhance company profits, has been widely adopted by firms worldwide. However, there are little researches on the effects of dynamic pricing on closed-loop supply chain (CLSC). The paper considers a Stackelberg game between one manufacturer and one retailer where the manufacturer, as the leader, decides the product quality and the wholesale price, and the retailer, as the follower, sets the retail price. Through the analysis of the research, it is concluded the following results: It is best for the manufacturer, the retailer and the whole supply chain to adopt dynamic pricing strategies compared with static pricing strategies in both two kinds of cases. In dynamic pricing strategies, the manufacturer should take a higher recycling rate where the recovery cost is low while take a lower recycling ratio where the recovery cost is high.

Keywords

Dynamic pricing strategy, differential game, reference quality effects, CLSC.