Decision Optimization and Coordination Strategy in Discrete-Time Dynamic Closed-Loop Supply Chains with Price and Goodwill Reference Effects

Considering that consumers have dual reference effects of price and goodwill; that is, consumers have psychological expectations for price and brand goodwill when making consumption decisions. A difference game model with reference effects is established for a closed-loop supply chain composed of a manufacturer, a retailer and a recycler, and a bidirectional cost-sharing contract is adopted for coordination. At the same time, the impact of dual reference effects and the bidirectional cost sharing contract on supply chain members’ profits are further analyzed by numerical simulation. We find that: (1) The impact of the price reference effect and the goodwill reference effect on supply chain decisions and market demand exhibits significant cost interval dependence. Notably, within a specific cost interval and under the influence of the dual reference effects, the market exhibits a phenomenon of “high price, high demand.” (2) The price reference effect influences the power structure of the supply chain. Specifically, when the price reference effect exceeds a certain threshold, the retailer’s profit surpasses the manufacturer’s profit. (3) The bidirectional cost-sharing contract coordinates the discrete dynamic closed-loop supply chain under dual reference effects. Consequently, it achieves a double Pareto improvement in supply chain members’ profits and brand goodwill.