Reverse Channel Competition in a Dual Sustainable Closed-Loop Supply Chain

In this paper we present a closed-loop supply chain (CLSC) model with a retailer selling products produced by a manufacturer. Products can be returned like a returnable packaging used in beverage industry. The products are returned through a 3rd party collector who makes effort to acquire them and sells them to a manufacturer who can recycle them and reuse the recycled raw material to produce a new product at a lower marginal cost. The customer is stimulated to buy sustainable products at a guaranteed buy-back price received at the point of collection. First, we model the case where only the 3rd party collects and we compare this model with the case where the 3rd party collector competes with the retailer who also enters the market to collect. We derive the CLSC's stability conditions of the solution with respect to the intensity level of the competition between the retailer and the 3rd party collector. We show that the customer benefits from the competition in the reverse chain boosting the whole market size and increasing the profit of the total supply chain. We also discuss the competition impact on the 3rd party collector who is impacted adversely by the market power of the retailer and the manufacturer.