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Entering the high-end market by collecting and remanufacturing a competitor’s high-end cores

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  • Xue, Dongmei
  • Teunter, Ruud H.
  • Zhu, Stuart X.
  • Zhou, Weihua

Abstract

Motivated by the smartphone industry, this paper studies a duopoly channel consisting of a high-end firm and a low-end firm. The high-end firm sells its own brand at a high profit margin. The low-end firm sells its own brand at a low profit margin, but can choose to differentiate by collecting and remanufacturing high-end cores, thereby entering the more lucrative high-end market. We investigate how the equilibrium strategies of both firms are influenced by the cost structure and customers’ valuation. We derive a condition for the low-end firm to engage in remanufacturing high-end cores, and show how the high-end firm reacts to limit the loss of market share.

Suggested Citation

  • 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).
  • Handle: RePEc:eee:jomega:v:99:y:2021:i:c:s0305048318310806
    DOI: 10.1016/j.omega.2019.102168
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