Competition or Authorization—Manufacturers’ Choice of Remanufacturing Strategies

Ying Wu () and Youwei Li
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Ying Wu: School of Management, Chongqing University of Science and Technology, Chongqing 401331, China

Sustainability, 2022, vol. 14, issue 19, 1-29

Abstract: In the face of the cannibalization of remanufactured products produced by independent remanufacturers (IRs), original equipment manufacturers (OEMs) can produce remanufactured products themselves to compete with independent remanufacturers (IRs), or they can authorize the IRs to cooperate because of their seller reputation. This paper studies the key factors that influence OEMs’ choice of remanufacturing strategies. By establishing three two-stage models and comparing them, the thresholds for OEMs to choose different remanufacturing strategies were obtained. There is also an interesting finding that when the authorization fee is higher than a certain value, even if the remanufactured product poses a competitive threat to the new product, the OEM will help the IR improve their remanufacturing technology to save costs and achieve a win–win situation. With the increase in authorization fees, OEMs’ profits will increase first and then decrease, so it is not always better for OEMs to charge higher authorization fees. Whether it is an authorization or a competitive scenario, the improvement in remanufacturing technology by OEMs can increase the output of remanufactured products, which is conducive to environmental protection.

Keywords: remanufacturing strategies; competition; authorization; strategic choice; authorization fee (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2022
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