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Abstract Considering a closed-loop supply chain whichconsists of a manufacturer and a retailer, this study uses Stackelberg game theory to study closed-loop supply chain decision making under the models of manufacturer advertising and retailer advertising. The findings are as below: Advertising effectiveness is conducive to increasing demand and recovery rates, thereby improving the utility of all parties and the total utility of the supply chain. However, the effect of advertising effects on wholesale price, retail price, manufacturer’s profit, and the overall profit of the supply chain varies with the degree of manufacturer’s CSR and the different advertisers. Manufacturer’s corporate social responsibility behavior, which also helps stimulate product demand and advertising investment, is beneficial to lowering the wholesale price and increasing the recovery rate. Thereby, the retailer utility, the manufacturer utility and the overall utility of the supply chain both increase. However, manufacturers’ corporate social responsibility behavior will cause some loss to their own profits. The direction that the retail price and the overall profit of the supply chain change with manufacturer’s corporate social responsibility is related to the advertising effect and the advertiser. From the perspective of improving the overall profitability and utility of the supply chain, the retailer advertising model is better; but from a point of view of cutting costs, the manufacturer’s advertising model should be adopted.
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Received: 08 October 2018
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