Coordination of closed-loop supply chain with government incentive

This paper develops a Stackelberg game model within a supply chain with one manufacturer and one retailer under the government incentive system, where the remanufacturing products are undifferentiated with the new ones. This paper is different from most of the extant literature about remanufacturing because they consider the effect of structure and recovery strategy on the system efficiency rather than the coordination mechanism with government subsidy. We mainly focus on the equilibrium results of both the manufacturer and retailer in the decentralized channel, and find that. the optimal return rate increases with the degree of government incentives, while the manufacturer´s profit is closely related with government policy. Then we find that the revenue-sharing contract can coordinate the supply chain successfully, and the government incentive mechanism system enlarges the Pareto range of the retailer´s revenue share.