LAUSR

Abstract Improving greening activities in manufacturing firms plays a major role in decreasing hazardous environmental impacts of the products and increasing social welfare (SW). This article considers a dyadic online to offline (O2O) closed loop supply chain (CLSC) composed of a manufacturer and a retailer for trading a single green product. Market demand is dependent on the products' selling price and green level. Using Stackelberg game, the manufacturer is responsible for greening activities and retailer sets the price of the products and recovers the end of life products which are bought through either online or offline channel. Then we formulate government direct limitation by determining certain thresholds for products' greening level. With the aim of maximizing SW, we analyze the effects of government anticipated greening activity on members' optimal decisions and profit. Moreover, the goal-seeking behavior of the government in the process of decision making is illustrated and optimal decisions and profits are compared under different cases. Through analyzing the results, it is concluded that government direct limitation on the green level of the products positively contributes to the amount of the collected used products. Moreover, the results show that this intervention policy is beneficial for the retailer since it increases the retailer's profit. On the other hand, the government should consider the positivity of the manufacturer's profit more seriously while decision making since this policy causes sudden drops in the manufacturer's profit in certain cases. In the proposed model, we also study the profit division of the members considering their risk attitude and bargaining power through asymmetrical Nash bargaining. To clarify this profit-sharing mechanism, we have provided its resulting improvement levels in the profit of the members and the whole supply chain (SC). Finally, the proposed model is justified by numerical examples.