Abstract: Aimed at a closed-loop supply chain (CLSC) with a single manufacture and a single retailer under the government premium and penalty mechanism, this paper constructs a centralized CLSC game model and three decentralized CLSC game models with game theory, which are manufacture and retailer Nash balance, manufacture-stackelberg, and retailer-stackelberg. Then, we discuss the impact of the premium and penalty range as well as lowest return rate on the decision and profits of the four CLSC models. The research shows that as the premium and penalty range increases, wholesale price, collection rate and manufacture's profit increase while retail price reduces. The retailer's profit and CLSC total profit are affected by both government premium and penalty range and the lowest return rate. Therefore, only if the government set up reasonable penalty range and the lowest return rate can CLSC and members in the system obtain economic and ecological benefit.

Key words: closed-loop supply chain, the government premium and penalty, power structure, decision