Optimal pricing and remanufacturing entry strategies of manufacturers in the presence of online reviews

Xin Yan and Xiaohua Han ()
Additional contact information
Xin Yan: Shanghai University
Xiaohua Han: Guangdong University of Foreign Studies

Annals of Operations Research, 2022, vol. 316, issue 1, No 4, 59-92

Abstract: Abstract In recent years, online reviews are increasingly getting more concerns by firms and consumers because they can help mitigate consumers’ uncertainty on product quality and experienced attributes and significantly affect firms’ operational decisions. We in this study attempt to examine the remanufacturing entry and pricing strategies of manufacturers in the presence of online reviews. We consider an original equipment manufacturer (OEM) selling a new product over two periods in online retailing and determine whether and when to adopt a remanufacturing entry strategy in the market. We uncover online reviews’ quality-dimensional effect and experienced dimensional effect that jointly determine the OEM’s pricing and remanufacturing strategies. We show that in the presence of online reviews, the OEM will cautiously determine whether to adopt the first-period remanufacturing entry strategy and may also adopt the second-period remanufacturing entry strategy under certain conditions. Interestingly, the OEM will adopt the penetration pricing strategy for the new product and the remanufactured product (if available) when the actual product quality is sufficiently high, but the skimming pricing strategy otherwise, which is different from the uniform pricing strategy in the absence of online reviews. Our results also show that online reviews significantly affect the OEM’s profit and consumer surplus. In particular, when the actual product quality is high enough, the OEM and consumers will attain the “win–win” situation.

Keywords: Online reviews; Remanufactured product; Entry strategy; Pricing strategy; Consumer surplus (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
http://link.springer.com/10.1007/s10479-021-04030-2 Abstract (text/html)
Access to the full text of the articles in this series is restricted.

Related works:
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:spr:annopr:v:316:y:2022:i:1:d:10.1007_s10479-021-04030-2

Ordering information: This journal article can be ordered from
http://www.springer.com/journal/10479

DOI: 10.1007/s10479-021-04030-2

Access Statistics for this article

Annals of Operations Research is currently edited by Endre Boros

More articles in Annals of Operations Research from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().