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To License or Not to License Remanufacturing Business?

Author

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  • Zu-Jun Ma

    (School of Management, Yangtze University, Jinzhou 434023, China
    School of Economics and Management, Southwest Jiaotong University, Chengdu 610031, China)

  • Qin Zhou

    (School of Economics and Management, Southwest Jiaotong University, Chengdu 610031, China)

  • Ying Dai

    (School of Economics and Management, Southwest Jiaotong University, Chengdu 610031, China)

  • Gao-Feng Guan

    (School of Management, Yangtze University, Jinzhou 434023, China
    School of Economics and Management, Southwest Jiaotong University, Chengdu 610031, China)

Abstract

Many original equipment manufacturers (OEMs) face the choice of whether to license an independent remanufacturer (IR) to remanufacture their used products. In this paper, we develop closed-loop supply chain models with licensed and unlicensed remanufacturing operations to analyze the competition and cooperation between an OEM and an IR. The OEM sells new products and collects used products through trade-ins, while the IR intercepts the OEM’s cores to produce remanufactured products and sell them in the same market. We derive optimal decisions for each of the two types of firms in licensed and unlicensed remanufacturing scenarios and identify conditions under which the OEM and the IR would be most likely to cooperate with each other in implementing remanufacturing. The results show although it is beneficial for an OEM to license an IR to remanufacture its cores, it is not always necessary for an IR to accept OEM’s authorization. Moreover, we contrast the result for licensed remanufacturing scenario in the decentralized system with that in the centrally coordinated system to quantify potential inefficiency resulting from decentralization of decision making.

Suggested Citation

  • Zu-Jun Ma & Qin Zhou & Ying Dai & Gao-Feng Guan, 2018. "To License or Not to License Remanufacturing Business?," Sustainability, MDPI, vol. 10(2), pages 1-21, January.
    • Handle: RePEc:gam:jsusta:v:10:y:2018:i:2:p:347-:d:129262
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    References listed on IDEAS

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    Cited by:

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    2. Zhou, Qin & Meng, Chao & Yuen, Kum Fai, 2020. "The impact of secondary market competition on refurbishing authorization strategies," International Journal of Production Economics, Elsevier, vol. 228(C).
    3. Zhou, Qin & Meng, Chao & Yuen, Kum Fai & Sheu, Jiuh-Biing, 2021. "Remanufacturing authorization strategy for an original equipment manufacturer-contract manufacturer supply chain: Cooperation or competition?," International Journal of Production Economics, Elsevier, vol. 240(C).
    4. Zhou, Qin & Meng, Chao & Sheu, Jiuh-Biing & Yuen, Kum Fai, 2023. "Remanufacturing mode and strategic decision: A game-theoretic approach," International Journal of Production Economics, Elsevier, vol. 260(C).
    5. Guojun Ji & Zhongfeng Sun & Kim Hua Tan, 2021. "Collaborative Rebate Strategy of Business-to-Customer Platforms Considering Recycling and Trade-Ins Simultaneously," Sustainability, MDPI, vol. 13(4), pages 1-19, February.
    6. Zongbao Zou & Fan Wang & Xiaofan Lai & Jingxian Hong, 2019. "How Does Licensing Remanufacturing Affect the Supply Chain Considering Customer Environmental Awareness?," Sustainability, MDPI, vol. 11(7), pages 1-23, March.
    7. Zhou, Qin & Meng, Chao & Yuen, Kum Fai, 2021. "Remanufacturing authorization strategy for competition among OEM, authorized remanufacturer, and unauthorized remanufacturer," International Journal of Production Economics, Elsevier, vol. 242(C).
    8. Tianyi Guo & Chaonan Li & Yan Chen, 2022. "Remanufacturing Strategy under Cap-and-Trade Regulation in the Presence of Assimilation Effect," Sustainability, MDPI, vol. 14(5), pages 1-19, March.
    9. Ehsan Shekarian & Simme Douwe Flapper, 2021. "Analyzing the Structure of Closed-Loop Supply Chains: A Game Theory Perspective," Sustainability, MDPI, vol. 13(3), pages 1-32, January.
    10. Dingyue Zhang & Xuemei Zhang & Bin Shi & Jian Cao & Gengui Zhou, 2018. "Collection and Remanufacturing of Waste Products under Patent Protection and Government Regulation," Sustainability, MDPI, vol. 10(5), pages 1-22, May.
    11. Jin, Minyue & Li, Gendao & Reimann, Marc, 2022. "Team of rivals: How should original equipment manufacturers cooperate with independent remanufacturers via authorisation?," European Journal of Operational Research, Elsevier, vol. 296(3), pages 837-845.
    12. Qin Zhou & Kum Fai Yuen, 2020. "Analyzing the Effect of Government Subsidy on the Development of the Remanufacturing Industry," IJERPH, MDPI, vol. 17(10), pages 1-20, May.

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