Abstract: Different from traditional supply chain, closed-loop supply chain focuses on remanufacturing or reusing the used products after their consumption, which is of great importance in reducing environmental pollution, decreasing resource consumption and fundamentally promoting the sustainable development of manufacturing industries. In order to explore the influence of remanufacturing strategy on the member enterprises in a closed-loop supply chain, we use game theory to develop the models of a two-echelon closed-loop supply chain with one manufacturer and one supplier. We particularly analyze the pricing decisions and system’s performance under different power structures, including supplier-dominated, manufacturer-dominated or balance of power between channel members. The results show that with remanufacturing strategy implementation, the sale price of products will decrease, the sales volume increase, and the wholesale price of components goes up. For the channel members, the remanufacturing strategy is more conductive to the manufacturer’s profitability. However, the influence of remanufacturing on supplier depends on the power of supplier in a chain. The dominant supplier can get extra profit from remanufacturing by considerably raising the wholesale price of components; and the weak supplier may incur loss due to the competition of remanufacturing. As for the performance of the whole supply chain, the remanufacturing strategy plays an important role in improving the whole system’s profitability, but the power structures have different effects on the economic value of remanufacturing. In general, the structure where power is equally split between members provides the best performance, then is the manufacturer-dominated, the worst is the supplier-dominated supply chain.

Key words: closed-loop supply chain, products remanufacturing, channel power, game theory