How to Conduct a Merger? A Stackelberg–Cournot Game for Financing Retailers in a Closed-Loop Supply Chain

Retailers in a closed-loop supply chain (CLSC) always confront capital constraint in establish recycling business, thereby turn to trade credit financing (TCF) or bank credit financing (BCF), and often accept mergers with other enterprises. To clarify the merger effects on CLSC members, Stackelberg–Cournot models are established to explore strategies of two capital-constrained financing retailers. The results indicate that TCF is commonly more beneficial than BCF in the nonmerger scenario. Interestingly, the TCF strategy does not always achieve profit advantage when the merger occurs; the two financing strategies have their own applicability. The manufacturer can increase its profit and develop the recycling business of CLSC in a compatible merger by merging the large retailer. In this scenario, both retailers can rise the recycling rates with a small share coefficient. This study also finds that a compatible merger may create economic benefits but increase environmental consumption, while an incompatible combination may increase both retailers’ recycling rates at the cost of losing revenue. Regardless of a compatible or incompatible merger, a Pareto region with all-win is found that all the social, environmental, and economic effects are promoted when the large retailer is merged.