Equilibrium Pricing in Partially Integrated-Direct (PID) Closed Loop Dual channel Supply Chains (CLDSC) Under Symmetric and Asymmetric Information

Saeed  Nabizadeh Marziani; Roya M. Ahari; Mahsa  Gandehari; Mahtab  Sherafati

Authors

Saeed Nabizadeh Marziani Department of Industrial Engineering, Na.C., Islamic Azad University, Najafabad, Iran Author https://orcid.org/0009-0004-0354-4756
Roya M. Ahari Department of Industrial Engineering, Na.C., Islamic Azad University, Najafabad, Iran Corresponding author https://orcid.org/0000-0002-8952-8682
Mahsa Gandehari Department of Management, Faculty of Administrative Sciences and Economics, University of Isfahan, Isfahan, Iran Author https://orcid.org/0009-0009-1637-2929
Mahtab Sherafati Department of Industrial Engineering, Na.C., Islamic Azad University, Najafabad, Iran Author https://orcid.org/0009-0008-6967-9310

Keywords:

Equilibrium pricing; Closed loop dual channel supply chain; Partially Integrated-Direct (PID); Manufacturer encroachment; Pricing and effort decisions; Stackelberg game; Symmetric and asymmetric information; Profit sharing contract.

Abstract

Manufacturers increasingly adopt direct online channels alongside traditional retail partners, creating a Partially Integrated structure in which the manufacturer and its direct channel operate as one unit while the retailer remains independent. This paper develops an equilibrium pricing model for such a Partially Integrated-Direct (PID) Closed Loop Dual channel Supply Chain (CLDSC) under symmetric and asymmetric information. Using game theoretic approaches—Nash, Stackelberg, Nash bargaining, and profit sharing—selling prices, wholesale prices, buyback prices, sales effort, and collection effort are optimized simultaneously. The manufacturer (integrated with the direct channel) acts as Stackelberg leader, setting wholesale prices and incentives for the independent retailer. Results from numerical simulation and sensitivity analysis reveal that: (1) the Partially Integrated structure balances coordination efficiency and competitive flexibility; (2) cooperative mechanisms significantly outperform non cooperative ones in total profit and environmental performance (total returns), though consumer surplus is lower; (3) asymmetric information reduces profit in cooperative models but benefits the manufacturer in Stackelberg via rent extraction; and (4) the profit sharing contract proves most robust against information asymmetry, exhibiting zero elasticity to buyback price effect and channel preference. A strategic framework is provided for governance structure selection based on trust levels, information transparency, and channel power balance, enabling managers to choose between competitive and cooperative mechanisms under varying environmental conditions.

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