Self-Recycling or Outsourcing? Research on the Trade-In Strategy of a Platform Supply Chain

Trade-in programs have become a vital mechanism for promoting sustainable consumption and reducing negative impacts on the environment, gaining substantial support from branders, e-platforms, and consumers in recent years. Concurrently, the emergence of professional recyclers has provided firms with viable alternatives for the outsourcing of recycling processes. To investigate the optimal leadership and recycling model with respect to trade-in operations, this study examines the strategy selection in a platform-based supply chain under a resale model. A two-period game-theoretic framework is developed, encompassing four models: self-recycling and outsourcing models under the leadership of the brander or platform. The main findings are as follows: (1) In markets characterized by a low consumer price sensitivity, both branders and platforms tend to choose the self-recycling model to capture the closed-loop value. In contrast, in highly price-sensitive markets, both parties exhibit a preference for “free-riding” strategies. (2) Once the recycling leader is determined, adopting a self-recycling model can lead to a relative win–win outcome in high price sensitivity contexts. (3) With a short product iteration cycle, both the brander and platform should strategically lower their prices in the first period, sacrificing short-term profits to enhance trade-in incentives and maximize long-term gains. (4) When the brander leads the recycling process, they should consider reusing the resources derived from old products; however, in platform-led models, the brander can only consider reusing the recycled resources in a low price sensitivity market. This study provides strategic insights for the sustainable development of the supply chain through the analysis of a game between a brander and an e-commerce platform, enriching the literature on CLSCs through integrating trade-in leadership selection and the choice to outsource, offering theoretical support for dynamic pricing strategies over multi-period product lifecycles.