Reward-penalty mechanism for closed-loop supply chains under responsibility-sharing and different power structures

We study responsibility sharing in waste electrical and electronic equipment (WEEE) collection between the manufacturer and the collector, and identify a reward-penalty mechanism (RPM) for government to motivate industry's recycling endeavor. We develop several RPMs for different closed-loop supply chains (CLSCs) under various channel power structures, including the manufacturer-led and the collector-led closed-loop supply chains, and those with and without government RPM. We find that increasing the reward-penalty intensity can improve the WEEE collection and lower product price. From the collection rate improvement perspective, the collector-led is a better channel structure of CLSC compared with centralized and manufacturer-led channel structure. Social welfare increases when both reward-penalty intensity and the CLSC leader's responsibility ratio are high. The government's RPM should satisfy two conditions: (i) under high reward-penalty intensity, more responsibility should be assigned to the CLSC leader; (ii) if the CLSC is collector-led, her responsibility ratio must be higher than 1/3 in order to enhance the collection rate. Similarly, the ratio of responsibility in the manufacturer-led case must be greater than 2/3 to improve the collection rate. (C) 2015 Elsevier B.V. All rights reserved.