Decision-making in a green trade-ins closed-loop supply chain under financial constraints and corporate social responsibility (CSR)

Abstract

The green and circular economy are two significant themes intertwined in sustainable development, which requires that they be dealt with integral rather than fragmented, as in most previous cases. Therefore, this paper models a closed-loop supply chain consisting of a manufacturer, an e-commerce platform, and a recycler. Among them, the manufacturer with CSR, the game leader, is responsible for green technology innovation, product manufacturing, and remanufacturing. The e-commerce platform and recycler follow online sales and recycling for used products. To solve this Stackelberg game model, we distinguish three scenarios, i.e., the recycler with sufficient funds, financially constrained recycler financing from the manufacturer, or the e-commerce platform. The results show that the recycling rate, the level of green innovation, the profit of each party, and total social welfare are the highest, second, and lowest in those three scenarios, respectively, if borrowing rates are the same in the latter two cases. The interest rate decreases to a certain extent under both financing models, contributing to improving supply chain performance. The manufacturer assumes CSR contributes to the profit of all other parties, the increase in the recycling rate, and the level of green innovation. However, the manufacturer’s profit decreases instead of rising, which reveals that the manufacturer should be actively assuming CSR to a certain extent.