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The dynamics of competition in remanufacturing: A stability analysis

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  • Shi, Lian
  • Sheng, Zhaohan
  • Xu, Feng

Abstract

In this paper, we study competition in remanufacturing. It involves an original manufacturer who makes new products and a remanufacturer who uses returned cores to produce differentiated products. The two manufacturers competitively determine their outputs based on boundedly rational expectation in dynamic competition process, which has been largely overlooked in prior literatures. The study shows that consumer's willingness-to-pay (WTP) has distinct effects on the manufacturers' performance and the stability of Nash equilibrium. A higher level of WTP may enhance or weaken the stability of Nash equilibrium, while it always jeopardizes the original manufacturer and benefits the remanufacturer. We further observe that market competition can converge to Nash equilibrium rapidly with a high speed of output adjustment, but may continue to deviate from it via two ways when the speed goes beyond a threshold. The results suggest that the original manufacturer should choose an appropriate adjustment speed to gain an advantage, and the remanufacturer should improve consumer's WTP to profit more.

Suggested Citation

  • Shi, Lian & Sheng, Zhaohan & Xu, Feng, 2015. "The dynamics of competition in remanufacturing: A stability analysis," Economic Modelling, Elsevier, vol. 50(C), pages 245-253.
    • Handle: RePEc:eee:ecmode:v:50:y:2015:i:c:p:245-253
    DOI: 10.1016/j.econmod.2015.07.002
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    1. Amitrajeet A. Batabyal & Hamid Beladi, 2017. "A game model of competition between a new good producer and a remanufacturer using negative advertising," Asia-Pacific Journal of Regional Science, Springer, vol. 1(2), pages 329-336, October.
    2. Batabyal Amitrajeet A. & Beladi Hamid, 2018. "Advertising and Competition for Market Share between a New Good Producer and a Remanufacturer," German Economic Review, De Gruyter, vol. 19(1), pages 113-118, February.
    3. Yu Yu & Weisheng Yu, 2019. "The Complexion of Multi-period Stackelberg Triopoly Game with Bounded Rationality," Computational Economics, Springer;Society for Computational Economics, vol. 53(1), pages 457-478, January.
    4. Amitrajeet A. Batabyal & Hamid Beladi, 2016. "A game model of competition for market share between a new good producer and a remanufacturer," Economics Bulletin, AccessEcon, vol. 36(2), pages 963-969.
    5. Amitrajeet A. Batabyal & Hamid Beladi, 2016. "A Game Model of New and Remanufactured Goods, Brown and Green Consumers, and Market Share Dominance," Journal of Quantitative Economics, Springer;The Indian Econometric Society (TIES), vol. 14(2), pages 345-354, December.
    6. Amitrajeet A. Batabyal & Hamid Beladi, 2018. "How transport costs affect the decision to purchase a new or a remanufactured good," Asia-Pacific Journal of Regional Science, Springer, vol. 2(2), pages 529-542, August.
    7. Fei Zhang & Zailin Guan & Li Zhang & Yanyan Cui & Pengxing Yi & Saif Ullah, 2019. "Inventory management for a remanufacture-to-order production with multi-components (parts)," Journal of Intelligent Manufacturing, Springer, vol. 30(1), pages 59-78, January.
    8. Askar, S.S. & Al-khedhairi, A., 2020. "On complex dynamic investigations of a piecewise smooth nonlinear duopoly game," Chaos, Solitons & Fractals, Elsevier, vol. 139(C).
    9. Peng, Yu & Lu, Qian & Xiao, Yue & Wu, Xue, 2019. "Complex dynamics analysis for a remanufacturing duopoly model with nonlinear cost," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 514(C), pages 658-670.
    10. Askar, S.S. & Al-khedhairi, A., 2020. "The dynamics of a business game: A 2D-piecewise smooth nonlinear map," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 537(C).
    11. Sameh Askar, 2021. "Complex Investigations of a Piecewise-Smooth Remanufacturing Bertrand Duopoly Game," Mathematics, MDPI, vol. 9(20), pages 1-13, October.

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