Screening third-party collectors’ double asymmetric information in a dual-channel closed-loop supply chain

Abstract

We investigate the third-party collector’s private information in a dual-channel closed-loop supply chain (DCLSC). The manufacturer sells her products through both an e-channel and retail channel and delegates the collection of waste electrical and electronic equipment (WEEE) to a third-party collector. The collector in a DCLSC has two types of private information: i.e., his collection effort level and collection ability. We develop principal-agent models to help the manufacturer design an information screening contract to obtain the collector’s asymmetric information. The results show that (i) an information screening contract can effectively prevent low ability collectors from misrepresenting their private information; (ii) although the increased awareness of environmental protection of consumers improves the manufacturer’s expected profit, it does not affect the retailer’s expected profit and the collector’s expected utility; (iii) the manufacturer’s expected profit enhances with the number of high ability collectors, whereas the expected utility of the high ability collector declines; (iv) the e-channel could not increase the total expected profit of the manufacturer and the retailer, but the channel transfers a part of the retailer’s expected profit to the manufacturer.