Strategic Remanufacturing under Competition

Ma Zhongwen (), Suresh Sethi and Prasad Ashutosh ()
Additional contact information
Prasad Ashutosh: Marketing, University of California, Riverside, CA92521, USA

Review of Marketing Science, 2019, vol. 16, issue 1, 85-107

Abstract: We investigate firms’ remanufacturing strategies for the case of a duopoly. On the one hand, remanufactured products cannibalize sales of new products of the same firm thereby hurting its profits. On the other hand, they can be part of a profitable marketing strategy that targets different customer preferences by providing a larger number of alternatives to customers. This paper studies the tradeoff between these effects and how it is influenced by competition. We develop a model where demand functions for new and remanufactured products of each firm are derived from utility maximization by a representative consumer. This allows us to capture preference and substitution effects between all offered products in the market. We discuss how equilibrium strategies are affected by factors such as competition, substitutability, production cost as well as remanufacturing cost. For example, when competitive intensity between new and new products, and remanufactured and remanufactured products, is (high), both (neither) firms offer remanufactured products in a symmetric equilibrium. If substitution between new and remanufactured products of the same firm is low, but the remanufactured product has a lower margin than the new product, firms can be worse off from remanufacturing.

Keywords: pricing; remanufacturing; competition; operations-marketing interface (search for similar items in EconPapers)
Date: 2019
References: Add references at CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://www.degruyter.com/view/j/roms.2019.16.issu ... -0019.xml?format=INT (text/html)
For access to full text, subscription to the journal or payment for the individual article is required.

Related works:
Journal Article: Strategic Remanufacturing under Competition (2018)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bpj:revmkt:v:16:y:2019:i:1:p:85-107:n:5

Ordering information: This journal article can be ordered from
https://www.degruyter.com/journal/key/roms/html

DOI: 10.1515/roms-2019-0019

Access Statistics for this article

Review of Marketing Science is currently edited by Ram C. Rao

More articles in Review of Marketing Science from De Gruyter
Bibliographic data for series maintained by Peter Golla ().