Pricing Decisions in a Dual-Channel Construction and Demolition Waste Recycling Supply Chain with Bilateral Free-Riding Behavior

Abstract

The dramatic increase in global construction and demolition waste (CDW) is a considerable environmental challenge, but recycled building materials face serious marketing bottlenecks. Although existing studies have focused on the technological path and policy regulation of CDW management, they have not yet considered the impact of sales effort level under the dual-channel sales model. Considering the coexistence of price competition and bidirectional free-riding behavior, this paper constructs a Stackelberg game model, which includes a construction waste remanufacturer with both online and offline sales channels and a building materials retailer, to reveal the pricing decision-making mechanism under bidirectional free-riding behavior. The results of the study show that (1) in the decentralized decision-making model, offline free-riding has a negative effect on the online channel, and when the effort cost coefficient is high, it increases the retail price of recycled building materials in the offline channel; at the same time, under high cross-price sensitivity, both the manufacturer and the retailer are negatively affected by online free-riding behaviors; (2) in contrast to decentralized decision-making, centralized decision-making motivates the supply chain as a whole to significantly increase sales effort investment and develop a better pricing strategy under the condition of satisfying the threshold cross-price sensitivity, which ultimately improves the overall efficiency of the supply chain. The findings provide an important theoretical basis and management insights for the coordination of dual-channel supply chains, the governance of free-riding behavior, and the promotion of recycled building materials in the recycling economy.