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Remanufacturing

  • Bernard, Sophie

This paper presents a theoretical model of remanufacturing where a duopoly of original manufacturers produces a component of a final good. The specific component that needs to be replaced during the lifetime of the final good creates a secondary market where independent remanufacturers enter the competition. An environmental regulation imposing a minimum level of remanufacturability is also introduced. The main results establish that, while collusion of the firms on the level of remanufacturability increases both profit and consumer surplus, a social planner could use collusion as a substitute for an environmental regulation. However, if an environmental regulation is to be implemented, collusion should be repressed since competition supports the public intervention better. Under certain circumstances, the environmental regulation can increase both profit and consumer surplus. Part of this result supports the Porter Hypothesis, which stipulates that industries respecting environmental regulations can see their profits increase.

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Article provided by Elsevier in its journal Journal of Environmental Economics and Management.

Volume (Year): 62 (2011)
Issue (Month): 3 ()
Pages: 337-351

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Handle: RePEc:eee:jeeman:v:62:y:2011:i:3:p:337-351
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/622870

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  1. Maia David & Bernard Sinclair-Desgagné, 2005. "Environmental regulation and the eco-industry," Working Papers hal-00243019, HAL.
  2. Andr, Francisco J. & Gonzlez, Paula & Porteiro, Nicols, 2009. "Strategic quality competition and the Porter Hypothesis," Journal of Environmental Economics and Management, Elsevier, vol. 57(2), pages 182-194, March.
  3. R. Cellini & L. Lambertini, 2003. "Dynamic R&D with Spillovers: Competition vs Cooperation," Working Papers 495, Dipartimento Scienze Economiche, Universita' di Bologna.
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  5. Kiesmuller, Gudrun P. & van der Laan, Erwin A., 2001. "An inventory model with dependent product demands and returns," International Journal of Production Economics, Elsevier, vol. 72(1), pages 73-87, June.
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  7. Mitra, Supriya & Webster, Scott, 2008. "Competition in remanufacturing and the effects of government subsidies," International Journal of Production Economics, Elsevier, vol. 111(2), pages 287-298, February.
  8. Lebreton, Baptiste & Tuma, Axel, 2006. "A quantitative approach to assessing the profitability of car and truck tire remanufacturing," International Journal of Production Economics, Elsevier, vol. 104(2), pages 639-652, December.
  9. Dennis W. Carlton & Michael Waldman, 2001. "Competition, Monopoly, and Aftermarkets," NBER Working Papers 8086, National Bureau of Economic Research, Inc.
  10. Laurens G. Debo & L. Beril Toktay & Luk N. Van Wassenhove, 2005. "Market Segmentation and Product Technology Selection for Remanufacturable Products," Management Science, INFORMS, vol. 51(8), pages 1193-1205, August.
  11. 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.
  12. Chung, Chun-Jen & Wee, Hui-Ming, 2008. "Green-component life-cycle value on design and reverse manufacturing in semi-closed supply chain," International Journal of Production Economics, Elsevier, vol. 113(2), pages 528-545, June.
  13. Thomas Eichner & Rüdiger Pethig, 1999. "Product Design and efficient Management of Recycling and Waste Treatment," Volkswirtschaftliche Diskussionsbeiträge 76-99, Universität Siegen, Fakultät Wirtschaftswissenschaften, Wirtschaftsinformatik und Wirtschaftsrecht.
  14. Canton, Joan, 2008. "Redealing the cards: How an eco-industry modifies the political economy of environmental taxes," Resource and Energy Economics, Elsevier, vol. 30(3), pages 295-315, August.
  15. Geraldo Ferrer & Jayashankar M. Swaminathan, 2006. "Managing New and Remanufactured Products," Management Science, INFORMS, vol. 52(1), pages 15-26, January.
  16. Giutini, Ron & Gaudette, Kevin, 2003. "Remanufacturing: The next great opportunity for boosting US productivity," Business Horizons, Elsevier, vol. 46(6), pages 41-48.
  17. Klemperer, Paul, 1995. "Competition When Consumers Have Switching Costs: An Overview with Applications to Industrial Organization, Macroeconomics, and International Trade," Review of Economic Studies, Wiley Blackwell, vol. 62(4), pages 515-39, October.
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