Coordination and Information Sharing in a Closed-Loop Supply Chain with Two-Part Tariff

Abstract

This paper focuses on the closed-loop supply chain where the retailer takes charge of not only retail, but also collection. The retailer always possesses more information about market than the manufacturer. Thus a key question for the manufacturer is how to provide incentives to the retailer to truthfully disclose the information about the market and to work hard. This paper deploys the contracts with which the manufacturer can coordinate the system under symmetric information and screen the type of the market to improve her profit under asymmetric information. As a result, the pooling contract can perfectly coordinate the decentralized system under asymmetric information, but the manufacturer obtains the lower profit; nevertheless, with the separating contracts the manufacturer obtains the larger profits though the system profit is lower