Interactive Impacts of Overconfidence and Competitive Preference on Closed-Loop Supply Chain Performance

Abstract

As sustainable development becomes an important goal for all industries, the study of closed-loop supply chains has gradually become a priority. Most of the previous studies on closed-loop supply chains are based on simple and single market conditions, which cannot analyze the real situation well. In this paper, two common behavioral preferences in the market, overconfidence and competitive preference, are incorporated into the study of closed-loop supply chains to investigate how the overconfidence of retailers and the competitive preference of manufacturers jointly affect the decisions and interests of both parties in closed-loop supply chains under different dominant models. It is concluded that in terms of pricing, while the wholesale price increases in the competitive preference, the reselling price in fact decreases when the retailer’s overconfidence level is of a middle level; in terms of recycling, the pursuit of high profits by monopolistic manufacturers is not conducive to recycling quantity in the secondary supply chain with recycling; in terms of profits, in a manufacturer-led model, the profits of all sides in the closed-loop supply chain, including the manufacturer itself, sometimes diminish as the manufacturer’s competitive preference behavior becomes more intense.

Keywords

• closed-loop supply chain
• overconfidence
• competitive preference
• Stackelberg game model