Sustainable development: Impacts of consumers' risk aversion on remanufacturing model selection and environmental performance

Weisheng Deng

Sustainable Development, 2020, vol. 28, issue 6, 1564-1574

Abstract: Remanufacturing serves as an efficient way to achieve sustainable development and has become increasingly popular. Various types of services, such as extended warranties and full refunds, are provided to reduce consumers' concerns and promote the sale of remanufactured products. This work is motivated by the fact that consumers are risk‐averse to remanufactured products and prefer new products due to quality, safety, and environmental issues. Taking into account the risk‐averse consumers, we consider four models in which there is no remanufacturing (NR model) and in which remanufacturing is carried out by the supplier (SR model), the manufacturer (MR model), or an independent remanufacturer (IR model); then, we analyze the remanufacturing model choice. We find that consumers' risk aversion and the relative profitability of remanufacturing are two critical factors that drive the optimal results. In particular, depending on the relationship of these two critical factors, the supplier may prefer either the SR model or the IR model, the environment may prefer either the NR model or the SR model, and the manufacturer always prefers the MR model. We further identify the condition in which the SR model may simultaneously benefit the supplier and the environment.

Date: 2020
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Citations: View citations in EconPapers (4)

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https://doi.org/10.1002/sd.2105

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Persistent link: https://EconPapers.repec.org/RePEc:wly:sustdv:v:28:y:2020:i:6:p:1564-1574

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