The price of anarchy in competitive reverse supply chains with quality-dependent price-only contracts

Abstract

To quantify the efficiency of decentralized competitive reverse supply chains (RSCs) with quality-dependent price-only contracts, we characterize the worst-case efficiency loss with the price of anarchy (PoA). Several scenarios with unilateral or bilateral horizontal competition under push or pull configurations of RSCs are discussed. Given the uncertainty in the returns of used products, we consider different consumers' return behaviors and investigate the effect of the quality levels of used products. We clarify the effect of horizontal competition for each scenario and find distinctive features of RSCs that differentiate them from traditional forward activities. Additional managerial insights are provided for discussion.