Differentiated pricing strategies in a two-period closed-loop supply chain with distributor remanufacturing under patent licensing

In the patent perfect market, the distributors should get original equipment manufacturers (OEM)´ authorization before they engage in remanufacturing. With the consideration of “patent barrier”, this paper investigates the differentiated pricing strategies for new and remanufactured products in a twoperiod closed-loop supply chain. In the case of decentralized decisions, as the leader of Stackelberg game, the OEM has the channel power to influence the distributor´s decisions. Different from the previous literature, an inequality constraint is set to connect the two periods dynamically and the backward induction method is utilized to solve the model. By comparing the optimal pricing strategies and profit allocations of remanufacturing with no remanufacturing case, we draw the conclusions that the patent licensing mechanism can not only change the OEM´s passive position in remanufacturing industry but also improve the profits of all the chain members in CLSC.