Optimal decisions and coordination of power battery closed-loop supply chain considering fairness concerns and government subsidies

The expansion of new energy vehicles has precipitated a significant increase in end-of-life batteries, highlighting critical battery lifecycle management issues. While current studies explore various dimensions of power battery recycling, the interaction between government interventions and the one-to-many and many-to-one fairness concerns remains underexplored, particularly with the third-party recycler mode. This gap hinders effective policy-making and management strategies. Therefore, we consider different fairness concerns under cap-and-trade regulation and recycling subsidies, establishing four game models incorporating the battery manufacturer (M), the vehicle manufacturer (V), and the third-party recycler (3P). Then, we analyze the corresponding pricing, marketing, and recycling strategies. To address fairness-related inefficiencies, we propose two coordination strategies. First, our results indicate that recycling quantity and member profits are significantly influenced by fairness concerns. Compared to the model without fairness concerns, M’s fairness concerns reduce recycling quantity, member profits, and overall supply chain profit, while V’s and 3P’s fairness concerns increase their own profits but decrease M’s profit. Second, we reveal that the effectiveness of government subsidies is moderated by members’ fairness concerns. Furthermore, the “improved two-part tariff” contract and the “joint revenue and cost-sharing” contract can coordinate the closed-loop supply chain with fairness concerns, achieving a Pareto improvement in recycling quantity, profit, and utility. Finally, robustness tests show that asymmetric fairness concerns do not affect the main conclusions, while endogenous government subsidies significantly impact social welfare. These findings support circular supply chain management by revealing key interactions among government interventions, fairness concerns, and supply chain performance.