Considering consumer quality preferences, who should offer trade- in between manufacturer and retail platform?

The trade-in service can enhance product sales and increase consumer loyalty; however, heterogeneity in consumer quality preferences significantly influences the provision and implementation of trade-in activities. By constructing a dynamic dual-supply chain model, this study examines the optimal choices for trade-in providers and the impact of consumer quality preferences on mode selection. The findings indicate that the decision of who should provide the trade-in service largely depends on the product's quality decay rate. When the quality decay rate is low, collaboration between the manufacturer and the retail platform favors manufacturer-led trade-in service. Conversely, when the quality decay rate is high, both parties tend to fall into a prisoner’s dilemma, each preferring to dominate the trade-in process independently. Furthermore, a higher proportion of pragmatic consumers in the market and greater sensitivity to quality tend to reduce the profits of the manufacturer and the retail platform within the supply chain, whereas the impact of innovative consumers is opposite. Notably, as the share of pragmatic consumers increases, both sides of the supply chain are more inclined to prefer the manufacturer offering trade-in service. In our extended research, we found that the influence of government subsidies on mode selection primarily depends on the price discounts provided by the dominant party in trade-in arrangements within each mode. We also considered scenarios with asymmetric net residual values of recovered products, and the results robustly validate the stability of our core findings.