We investigate a closed-loop supply chain (CLSC) where the retailer and the third-party recycler compete against each other to collect waste electrical and electronic equipment (WEEE) given that collection effort is their private information. Using the principle-agent theory, we develop a CLSC model with dual collection channel without the government’s reward–penalty mechanism (RPM). An information screening contract is designed for the manufacturer to attain real information on collection effort levels; meanwhile, the optimal decision-making results of other decision variables are derived. Next, we take RPM into account to further examine the efficacy of the government’s guidance mechanism in improving collection rate and profits of CLSC members. Our results indicate that (i) the collection competition reduces the total collection quantity and the expected profits of all the CLSC members without RPM; (ii) all CLSC members’ expected profits are improved if both two collection agents select a high collection effort level without and with RPM; (iii) RPM increases buyback price, collection price, collection quantity, and franchise fee but decreases wholesale price and retail price; with the reward–penalty intensity increasing, the manufacturer’s expected profit first decreases and then increases, while the expected profits of H-type retailer and H-type third-party recycler continue to increase. We find that RPM may ultimately stimulate the collection agents to collect more WEEEs, while the intense collection competition reduces the profits of CLSC members.

This paper examines the waste of electrical and electronic equipments (WEEE) and draws on variational inequalities to model the closed-loop supply chain network. The network consists of manufacturers, retailers and consumer markets engaging in a Cournot-Nash game. Retailers are responsible for collecting WEEE in the network. It is assumed that the price of the remanufactured goods is different from that of the newly manufactured ones. The network equilibrium occurs when all players agree on volumes and prices. Several properties of the model are examined and the modified projection method is utilized to obtain the optimal solutions. Numerical examples are provided to illustrate the impact of CLSC parameters on the profits of channel members and consumer benefits, and to provide policy support for governments. We find that it is necessary to regulate a medium collection rate and a certain minimum recovery rate. This is also advantageous to manufacturers in producing new manufactured products. The impact of collection rate and recovery rate on manufacturers are greater than that on retailers. Consumers can benefit from the increase of the recovery rate as well as the collection rate.

The government plays a crucial role in regulating the closed-loop supply chain (CLSC). We investigated the reward-penalty mechanism (RPM) for the manufacturer and the subsidy mechanism (SM) for the collector in CLSCs. The government’s goal is to maximize social welfare. Based on the centralized and decentralized decision-making models without government intervention, we developed two CLSC models where the government rewards or penalizes the manufacturer and subsidizes the collector. Then, the impact of government input cost and environmental benefit coefficients on the decision variable, firm’s profit and social welfare was analyzed. We found the following conclusions: (i) both RPM and SM increase the collection rate and the profit of CLSC partners, while the price of a new product decreases if the environmental benefit coefficient is moderate; (ii) social welfare and the profits of the manufacturer and retailer under RPM are higher than under SM, while a collector’s profit under RPM is lower than that under SM; (iii) RPM is more feasible to implement in terms of the higher collection rate, buyback price and social welfare. These conclusions could provide several managerial implications for both the government and partners of the CLSC.

This paper examines the impact of reward-penalty mechanism (RPM) on the decision-making of a closed-loop supply chain (CLSC) under the framework of market segmentation. Decentralized dynamic game models are developed to obtain and compare the pricing and collecting decision of the CLSC with and without RPM. We find that: (i) RPM improves the actual collection rate and the profit of the recycler, while it decreases the prices of new and remanufactured products in market segments in response to higher consumer preferences; (ii) a higher buyback price guarantees that the manufacturer becomes more profitable when the government imposes low or high intensity of reward-penalty. Otherwise, the manufacturer should set a lower buyback price when the government imposes moderate intensity of reward-penalty; (iii) higher intensity of reward-penalty can not only effectively improve the environment, but also obtain higher social welfare; (iv) the mechanism that reward equals penalty is optimal, in which case the same intensity maximizes the actual collection rate as well as the profits of the manufacturer and the recycler. Our analysis discusses the parameters which have significant impacts on the pricing and collecting decision of the closed-loop supply chain and gains managerial insights that are both environmentally and economically beneficial.

We investigate the third-party collector’s private information in a dual-channel closed-loop supply chain (DCLSC). The manufacturer sells her products through both an e-channel and retail channel and delegates the collection of waste electrical and electronic equipment (WEEE) to a third-party collector. The collector in a DCLSC has two types of private information: i.e., his collection effort level and collection ability. We develop principal-agent models to help the manufacturer design an information screening contract to obtain the collector’s asymmetric information. The results show that (i) an information screening contract can effectively prevent low ability collectors from misrepresenting their private information; (ii) although the increased awareness of environmental protection of consumers improves the manufacturer’s expected profit, it does not affect the retailer’s expected profit and the collector’s expected utility; (iii) the manufacturer’s expected profit enhances with the number of high ability collectors, whereas the expected utility of the high ability collector declines; (iv) the e-channel could not increase the total expected profit of the manufacturer and the retailer, but the channel transfers a part of the retailer’s expected profit to the manufacturer.

This paper investigates the reward-penalty mechanism (RPM) implemented by the government in a closed-loop supply chain (CLSC) with asymmetric information. The manufacturer produces and sells products to consumers, while the collection of waste electrical and electronic equipment (WEEE) is delegated to the third-party collector, the one who has private information about the collection effort level. An information screening contract for the manufacturer is put forward to obtain the private information from the third-party collector, which is composed of buy-back price and franchise fee. By utilizing principal-agent theory, two cases are mainly examined including the CLSC without the RPM and the CLSC with the RPM. The results demonstrate that (i) the information screening contract is effective in capturing the collector’s collection effort level, (ii) raising the buy-back price to motivate the third-party collector is confirmed to perform well on enhancing the collection quantity from consumers, (iii) H-type collector collects more WEEEs and earns more profits than L-type collector, and (iv) the RPM improves the collection quantity of the enterprise and reaps more environmental benefits. The numerical results verify the validity of the contract and the feasibility of the RPM.