IDEAS home Printed from https://ideas.repec.org/a/eee/ejores/v306y2023i2p679-692.html
   My bibliography  Save this article

Competition of consumables’ original brand manufacturers and remanufacturers considering the entry of compatible manufacturers

Author

Listed:
  • Du, Hang
  • Wei, Lai
  • Zhu, Qinghua

Abstract

Original brand consumables and remanufactured consumables are provided in the after-sales market, and in recent years the entry of compatible consumables provides a new option for consumers. Compared with original brand consumables, remanufactured and compatible consumables enjoy a cost advantage, but they suffer from different consumer trust discounts in the market. In order to capture the scenarios that before and after compatible products enter, we develop two independent static game models and explore equilibrium market structures for three types of consumables. Surprisingly, we find that (1) the more obscure consumer trust in remanufactured and compatible products, the more favorable to the coexistence of the three products, however, the appropriate distinction between remanufactured and compatible products is beneficial to a remanufacturer; (2) reduction of the failure rate by the remanufacturer will give free-riding opportunities to compatible products that also have non-original brand characteristics; and (3) the entry of compatible products cannot always improve consumer surplus and social welfare. These findings provide management suggestions for three types of manufacturing enterprises to sort out their competitive relationships, and also give policy implications for the government to promote the remanufacturing industry.

Suggested Citation

  • Du, Hang & Wei, Lai & Zhu, Qinghua, 2023. "Competition of consumables’ original brand manufacturers and remanufacturers considering the entry of compatible manufacturers," European Journal of Operational Research, Elsevier, vol. 306(2), pages 679-692.
    • Handle: RePEc:eee:ejores:v:306:y:2023:i:2:p:679-692
    DOI: 10.1016/j.ejor.2022.07.041
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0377221722006105
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.ejor.2022.07.041?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Xue, Dongmei & Teunter, Ruud H. & Zhu, Stuart X. & Zhou, Weihua, 2021. "Entering the high-end market by collecting and remanufacturing a competitor’s high-end cores," Omega, Elsevier, vol. 99(C).
    2. Atalay Atasu & Miklos Sarvary & Luk N. Van Wassenhove, 2008. "Remanufacturing as a Marketing Strategy," Management Science, INFORMS, vol. 54(10), pages 1731-1746, October.
    3. Gaskins, Darius Jr., 1971. "Dynamic limit pricing: Optimal pricing under threat of entry," Journal of Economic Theory, Elsevier, vol. 3(3), pages 306-322, September.
    4. Céline Michaud & Daniel Llerena, 2011. "Green consumer behaviour: an experimental analysis of willingness to pay for remanufactured products," Business Strategy and the Environment, Wiley Blackwell, vol. 20(6), pages 408-420, September.
    5. Kleber, Rainer & Quariguasi Frota Neto, João & Reimann, Marc, 2020. "Proprietary parts as a secondary market strategy," European Journal of Operational Research, Elsevier, vol. 283(3), pages 929-941.
    6. Geraldo Ferrer & Jayashankar M. Swaminathan, 2006. "Managing New and Remanufactured Products," Management Science, INFORMS, vol. 52(1), pages 15-26, January.
    7. Li, Yongjian & Feng, Lipan & Govindan, Kannan & Xu, Fangchao, 2019. "Effects of a secondary market on original equipment manufactures’ pricing, trade-in remanufacturing, and entry decisions," European Journal of Operational Research, Elsevier, vol. 279(3), pages 751-766.
    8. Gökçe Esenduran & Eda Kemahlıoğlu-Ziya & Jayashankar M. Swaminathan, 2017. "Impact of Take-Back Regulation on the Remanufacturing Industry," Production and Operations Management, Production and Operations Management Society, vol. 26(5), pages 924-944, May.
    9. Tianqin Shi & Dilip Chhajed & Zhixi Wan & Yunchuan Liu, 2020. "Distribution Channel Choice and Divisional Conflict in Remanufacturing Operations," Production and Operations Management, Production and Operations Management Society, vol. 29(7), pages 1702-1719, July.
    10. Ferrer, Geraldo & Swaminathan, Jayashankar M., 2010. "Managing new and differentiated remanufactured products," European Journal of Operational Research, Elsevier, vol. 203(2), pages 370-379, June.
    11. Kleber, Rainer & Reimann, Marc & Souza, Gilvan C. & Zhang, Weihua, 2018. "On the robustness of the consumer homogeneity assumption with respect to the discount factor for remanufactured products," European Journal of Operational Research, Elsevier, vol. 269(3), pages 1027-1040.
    12. Akshay Mutha & Saurabh Bansal & V. Daniel R. Guide, 2019. "Selling Assortments of Used Products to Third‐Party Remanufacturers," Production and Operations Management, Production and Operations Management Society, vol. 28(7), pages 1792-1817, July.
    13. Céline Michaud & Daniel Llerena, 2011. "Green consumer behaviour: an experimental analysis of willingness to pay for remanufactured products," Post-Print hal-01809083, HAL.
    14. Heese, Hans S. & Cattani, Kyle & Ferrer, Geraldo & Gilland, Wendell & Roth, Aleda V., 2005. "Competitive advantage through take-back of used products," European Journal of Operational Research, Elsevier, vol. 164(1), pages 143-157, July.
    15. James D. Abbey & Rainer Kleber & Gilvan C. Souza & Guido Voigt, 2017. "The Role of Perceived Quality Risk in Pricing Remanufactured Products," Production and Operations Management, Production and Operations Management Society, vol. 26(1), pages 100-115, January.
    16. Xiao, Tiaojun & Qi, Xiangtong, 2010. "Strategic wholesale pricing in a supply chain with a potential entrant," European Journal of Operational Research, Elsevier, vol. 202(2), pages 444-455, April.
    17. Yao Chen & Fangruo Chen, 2019. "On the Competition between Two Modes of Product Recovery: Remanufacturing and Refurbishing," Production and Operations Management, Production and Operations Management Society, vol. 28(12), pages 2983-3001, December.
    18. Xiong, Yu & Zhao, Pei & Xiong, Zhongkai & Li, Gendao, 2016. "The impact of product upgrading on the decision of entrance to a secondary market," European Journal of Operational Research, Elsevier, vol. 252(2), pages 443-454.
    19. Douglas Bowman & Hubert Gatignon, 1996. "Order of Entry as a Moderator of the Effect of the Marketing Mix on Market Share," Marketing Science, INFORMS, vol. 15(3), pages 222-242.
    20. 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.
    21. Wu, Xiaole & Zhou, Yu, 2019. "Buyer-specific versus uniform pricing in a closed-loop supply chain with third-party remanufacturing," European Journal of Operational Research, Elsevier, vol. 273(2), pages 548-560.
    22. Kleber, Rainer & Reimann, Marc & Souza, Gilvan C. & Zhang, Weihua, 2020. "Two-sided competition with vertical differentiation in both acquisition and sales in remanufacturing," European Journal of Operational Research, Elsevier, vol. 284(2), pages 572-587.
    23. Saibal Ray & Tamer Boyaci & Necati Aras, 2005. "Optimal Prices and Trade-in Rebates for Durable, Remanufacturable Products," Manufacturing & Service Operations Management, INFORMS, vol. 7(3), pages 208-228, January.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Cao, Jian & Wu, Sisi & Kumar, Sanjay, 2023. "Recovering and remanufacturing to fulfill EPR regulation in the presence of secondary market," International Journal of Production Economics, Elsevier, vol. 263(C).
    2. Zhao, Senlin & You, Zhuangzhuang & Zhu, Qinghua, 2021. "Quality choice for product recovery considering a trade-in program and third-party remanufacturing competition," International Journal of Production Economics, Elsevier, vol. 240(C).
    3. Kleber, Rainer & Quariguasi Frota Neto, João & Reimann, Marc, 2020. "Proprietary parts as a secondary market strategy," European Journal of Operational Research, Elsevier, vol. 283(3), pages 929-941.
    4. Qiao, Haike & Su, Qin, 2021. "Distribution channel and licensing strategy choice considering consumer online reviews in a closed-loop supply chain," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 151(C).
    5. Ma, Peng & Gong, Yeming & Mirchandani, Prakash, 2020. "Trade-in for remanufactured products: Pricing with double reference effects," International Journal of Production Economics, Elsevier, vol. 230(C).
    6. Xue, Dongmei & Teunter, Ruud H. & Zhu, Stuart X. & Zhou, Weihua, 2021. "Entering the high-end market by collecting and remanufacturing a competitor’s high-end cores," Omega, Elsevier, vol. 99(C).
    7. 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.
    8. Zhang, Abraham & Wang, Jason X. & Farooque, Muhammad & Wang, Yulan & Choi, Tsan-Ming, 2021. "Multi-dimensional circular supply chain management: A comparative review of the state-of-the-art practices and research," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 155(C).
    9. Wu, Cheng-Han, 2015. "Strategic and operational decisions under sales competition and collection competition for end-of-use products in remanufacturing," International Journal of Production Economics, Elsevier, vol. 169(C), pages 11-20.
    10. Lijun Meng & Qiang Qiang & Zuqing Huang & Baoyou Zhang & Yuxiang Yang, 2020. "Optimal Pricing Strategy and Government Consumption Subsidy Policy in Closed-Loop Supply Chain with Third-Party Remanufacturer," Sustainability, MDPI, vol. 12(6), pages 1-29, March.
    11. Borenich, Andrea & Dickbauer, Yanick & Reimann, Marc & Souza, Gilvan C., 2020. "Should a manufacturer sell refurbished returns on the secondary market to incentivize retailers to reduce consumer returns?," European Journal of Operational Research, Elsevier, vol. 282(2), pages 569-579.
    12. Quan, Yuting & Hong, Jiangtao & Song, Jingpu & Leng, Mingming, 2021. "Game-theoretic analysis of trade-in services in closed-loop supply chains," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 152(C).
    13. Han, Xiaohua & Yang, Qianxia & Shang, Jennifer & Pu, Xujin, 2017. "Optimal strategies for trade-old-for-remanufactured programs: Receptivity, durability, and subsidy," International Journal of Production Economics, Elsevier, vol. 193(C), pages 602-616.
    14. De, Arijit & Ray, Ankita & Kundu, Tanmoy & Sheu, Jiuh-Biing, 2023. "Is it wise to compete or to collaborate? Remanufacturing business models under collective extended producer responsibility legislation," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 179(C).
    15. Kleber, Rainer & Reimann, Marc & Souza, Gilvan C. & Zhang, Weihua, 2020. "Two-sided competition with vertical differentiation in both acquisition and sales in remanufacturing," European Journal of Operational Research, Elsevier, vol. 284(2), pages 572-587.
    16. Chang Fang & Zhuangzhuang You & Yudou Yang & Duomei Chen & Samar Mukhopadhyay, 2020. "Is third-party remanufacturing necessarily harmful to the original equipment manufacturer?," Annals of Operations Research, Springer, vol. 291(1), pages 317-338, August.
    17. Yang, Feng & Wang, Manman & Ang, Sheng, 2021. "Optimal remanufacturing decisions in supply chains considering consumers’ anticipated regret and power structures," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 148(C).
    18. 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).
    19. Xiaohua Han & Ying Shen & Yiwen Bian, 2020. "Optimal recovery strategy of manufacturers: Remanufacturing products or recycling materials?," Annals of Operations Research, Springer, vol. 290(1), pages 463-489, July.
    20. Ying Wu & Youwei Li, 2022. "Competition or Authorization—Manufacturers’ Choice of Remanufacturing Strategies," Sustainability, MDPI, vol. 14(19), pages 1-29, October.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:ejores:v:306:y:2023:i:2:p:679-692. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/eor .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.