Abstract: In a closed-loop supply chain, the members are exposed to both product demand and recycling uncertainties. At this time, most decision makers will avoid risk and consider risk factors when making decisions. In addition, the channel leaders' attitude towards risk can strongly affect their followers. Based on existing business practices, the optimal pricing decision and performance of the risk-averse closed-loop supply chain are studied under the power structure of manufacturer-led, retailer-led, and manufacturer-retailer power balance. Then, the optimal decision under alliance and non-aligned situation between the manufacturer and the retailer is influenced by the risk-averse characteristic of channel leader, which is different under different channel power structure. Therefore, a comparative analysis is also made on the influence of risk aversion degree on closed-loop supply chain decisions and expected revenue under different channel power structures and alliance strategies.
In the construction of the models, firstly, the random variable is used to describe the market demand of new products and the recycling quantity of used products, and the exponential function is used to measure the utility of risk-averse decision makers. Then, the closed-loop supply chain game models of manufacturer and retailer alliance and non-alliance are constructed respectively under the three situations of manufacturer-led, manufacturer and retailer power balance and retailer-led. Finally, the Nash equilibrium game is used to solve the manufacturer-retailer power balance model and the Stakelberg game and the inverse induction method is used to solve the manufacturer-led and retailer-led models. By comparing the equilibrium solutions under the six models, the research conclusions are as follows:(1) When the manufacturer and retailer are not affiliated, their risk aversion coefficients have the same effect on optimal decisions. (2) When the manufacturer and retailer are not in alliance, the balanced power structure is the best for consumers; while when the manufacturer and retailer are in alliance, the balanced channel power structure is the most disadvantageous for consumers. (3) Under the uncertain market demand and recycling environment, the active price strategy can bring higher returns for the closed-loop supply chain when the manufacturer and retailer are in alliance, while the conservative price strategy can bring higher returns for the closed-loop supply chain when manufacturers and retailers are not in alliance. (4) The expected return of supply chain is the largest under the balanced power structure, the expected return of manufacturer is the largest under the power structure dominated by manufacturers, and the expected return of retailer is the largest under the power structure dominated by retailers.

Key words: closed-loop supply chain, risk-aversion, channel power structures, random recovery