Effects of Information Asymmetry on Green Promotion for Remanufacturing in a Closed-Loop Supply Chain

Nowadays, manufacturers have engaged in remanufacturing as a potential opportunity to effectively establish a green image. Many of these manufacturers make green promotion efforts (GPEs), marketing the green achievements of remanufacturing in order to improve their green image to attract more consumers. In many cases, manufacturers often outsource collection activities of used products for remanufacturing to third-party collectors (3PCs). Obviously, since a manufacturer’s GPE improves consumer demand, both the manufacturer and the 3PC can benefit from the GPE. However, GPE effectiveness, the effect of the GPE on consumer demand, is typically the manufacturer’s private information. When the 3PC lacks this information, the 3PC may set up unreasonable selling prices and collection quantities for remanufacturable used products. Thus, we aim to explore how the 3PC designs a two-part tariff (TPT) contract menu to obtain the manufacturer’s GPE effectiveness information. Based on the above, we consider a closed-loop supply chain that consists of one manufacturer and one 3PC. We discuss the optimal decisions under three decision-making scenarios: the centralized scenario, the complete information scenario, and the asymmetric information scenario. Our research shows that, under information asymmetry, the manufacturer with high GPE effectiveness (H-type manufacturer) tends to pretend to be the manufacturer with low GPE effectiveness (L-type manufacturer). In this case, the H-type manufacturer obtains extra profit due to information asymmetry. However, for the 3PC, information asymmetry reduces its expected profit if the manufacturer has high GPE effectiveness and increases its expected profit if the manufacturer has low GPE effectiveness. Finally, we reveal that information asymmetry does not always hurt consumer surplus