Based on the introduction of private brands by retailers, this paper studies the effect of return compensation on retailer's optimal pricing. The results show that: (1) consumer return cost is lower than retailer return cost: low return compensation makes retailers give up providing refund guarantee for their own brands. Generally, compensation for returned goods shall be determined according to the specific situation of returned goods cost of each member of the supply chain. When return

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... ation is large, the retailer should choose to provide return compensation only for its own brand. (2) Consumer return cost is higher than retailer return cost: when the return cost is smaller or larger, retailer provides refund guarantee for its own brand. When return compensation is common and consumer return costs are low, retailers offering return compensation for private brands can have a negative impact.