IDEAS home Printed from https://ideas.repec.org/a/eee/proeco/v289y2025ics0925527325002865.html

Shareholding or authorization? The choice of cooperation between original equipment manufacturers and independent remanufacturers

Author

Listed:
  • Cheng, Fei
  • Chen, Qiao
  • Liu, Xiaoxi
  • Zhang, Yimeng

Abstract

This study investigates the transformative role of equity participation in remanufacturing supply chains, where shareholding has emerged as a strategic complement to conventional authorization frameworks between original equipment manufacturers (OEMs) and independent remanufacturers (IRs). By integrating shareholding into the remanufacturing supply chain, we focus on the impact of different remanufacturing modes on consumers' willingness to pay (WTP) for remanufactured products, and further discussing how these effects shape the cooperation choices of supply chain members. Using a game-theoretic model, we analyze three scenarios: competition, shareholding, and authorization. We reveal that shareholding incentivizes full remanufacturing engagement by the IR, whereas authorization suppresses such initiatives. This divergence stems from the structural capacity of equity participation while mitigating product cannibalization risks. When considering environmental impact, both shareholding and authorization can achieve a win-win-win situation on the triple bottom line under certain conditions. In addition, despite the potential for enhanced systemic efficiency under shareholding, persistent preference conflicts between the OEM (favoring the authorization mode) and the IR (preferring the shareholding mode) preclude Pareto-optimal outcomes. The OEM's active strategic behavior can solve this negotiation dilemma, including choosing to implement cost reduction strategy and equity structure adjustment strategy.

Suggested Citation

  • Cheng, Fei & Chen, Qiao & Liu, Xiaoxi & Zhang, Yimeng, 2025. "Shareholding or authorization? The choice of cooperation between original equipment manufacturers and independent remanufacturers," International Journal of Production Economics, Elsevier, vol. 289(C).
    • Handle: RePEc:eee:proeco:v:289:y:2025:i:c:s0925527325002865
    DOI: 10.1016/j.ijpe.2025.109801
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0925527325002865
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.ijpe.2025.109801?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

    for a different version of it.

    References listed on IDEAS

    as
    1. 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).
    2. Yang, Lei & Gao, Muyi & Feng, Lipan, 2022. "Competition versus cooperation? Which is better in a remanufacturing supply chain considering blockchain," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 165(C).
    3. Tal Avinadav & Noam Shamir, 2023. "Partial Vertical Ownership, Capacity Investment, and Information Exchange in a Supply Chain," Management Science, INFORMS, vol. 69(10), pages 6038-6056, October.
    4. Zou, Zong-Bao & Wang, Jian-Jun & Deng, Gui-Shi & Chen, Haozhe, 2016. "Third-party remanufacturing mode selection: Outsourcing or authorization?," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 87(C), pages 1-19.
    5. Yanting Huang & Zongjun Wang, 2019. "Pricing and production decisions in a closed-loop supply chain considering strategic consumers and technology licensing," International Journal of Production Research, Taylor & Francis Journals, vol. 57(9), pages 2847-2866, May.
    6. Katharine E. Rockett, 1990. "Choosing the Competition and Patent Licensing," RAND Journal of Economics, The RAND Corporation, vol. 21(1), pages 161-171, Spring.
    7. Ravi Subramanian & Ramanath Subramanyam, 2012. "Key Factors in the Market for Remanufactured Products," Manufacturing & Service Operations Management, INFORMS, vol. 14(2), pages 315-326, April.
    8. Chen, Jen-Ming & Chang, Chia-I, 2012. "The co-opetitive strategy of a closed-loop supply chain with remanufacturing," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 48(2), pages 387-400.
    9. Vishal V. Agrawal & Atalay Atasu & Koert van Ittersum, 2015. "Remanufacturing, Third-Party Competition, and Consumers' Perceived Value of New Products," Management Science, INFORMS, vol. 61(1), pages 60-72, January.
    10. Li, Jin & Yang, Shilei & Shi, Victor & Zhai, Senjing, 2020. "Partial vertical centralization in competing supply chains," International Journal of Production Economics, Elsevier, vol. 224(C).
    11. Zhangwei Feng & Na Luo & Bisheng Du & Haorui Wang, 2023. "Third-party remanufacturing modes with integrated tax-subsidy policy," European Journal of Industrial Engineering, Inderscience Enterprises Ltd, vol. 17(5), pages 740-765.
    12. 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.
    13. Ren, Da & Guo, Rui & Lan, Yanfei & Shang, Changjing, 2021. "Shareholding strategies for selling green products on online platforms in a two-echelon supply chain," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 149(C).
    14. Li, Wei & Jin, Mingzhou & Galbreth, Michael R., 2024. "Should original equipment manufacturers authorize third-party remanufacturers?," European Journal of Operational Research, Elsevier, vol. 314(3), pages 1013-1028.
    15. Yang, Lei & Hu, Yijuan & Huang, Lijuan, 2020. "Collecting mode selection in a remanufacturing supply chain under cap-and-trade regulation," European Journal of Operational Research, Elsevier, vol. 287(2), pages 480-496.
    16. Kai Kang & Letian Zhang & Mengyu He & Zhiying Zhang, 2024. "Asset-light operation strategy for car-sharing model with vertical shareholding: financial leasing or instalment factoring," International Journal of Production Research, Taylor & Francis Journals, vol. 62(20), pages 7540-7558, October.
    17. Liu, Huihui & Lei, Ming & Huang, Tao & Leong, G. Keong, 2018. "Refurbishing authorization strategy in the secondary market for electrical and electronic products," International Journal of Production Economics, Elsevier, vol. 195(C), pages 198-209.
    18. Liangjie Xia & Qingyi Kong & Youdong Li & Juanjuan Qin, 2023. "Effect of equity holding on a supply chain’s pricing and emission reduction decisions considering information sharing," Annals of Operations Research, Springer, vol. 329(1), pages 619-656, October.
    19. Alegoz, Mehmet & Kaya, Onur & Bayindir, Z. Pelin, 2021. "A comparison of pure manufacturing and hybrid manufacturing–remanufacturing systems under carbon tax policy," European Journal of Operational Research, Elsevier, vol. 294(1), pages 161-173.
    20. 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.
    21. Geraldo Ferrer & Jayashankar M. Swaminathan, 2006. "Managing New and Remanufactured Products," Management Science, INFORMS, vol. 52(1), pages 15-26, January.
    22. Hazen, Benjamin T. & Overstreet, Robert E. & Jones-Farmer, L. Allison & Field, Hubert S., 2012. "The role of ambiguity tolerance in consumer perception of remanufactured products," International Journal of Production Economics, Elsevier, vol. 135(2), pages 781-790.
    23. Ze-Bin Wang & Yao-Yu Wang & Jian-Cai Wang, 2016. "Optimal distribution channel strategy for new and remanufactured products," Electronic Commerce Research, Springer, vol. 16(2), pages 269-295, June.
    24. 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).
    25. Liu, Zhi & Li, Kevin W. & Li, Bang-Yi & Huang, Jun & Tang, Juan, 2019. "Impact of product-design strategies on the operations of a closed-loop supply chain," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 124(C), pages 75-91.
    26. 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.
    27. Nektarios Oraiopoulos & Mark E. Ferguson & L. Beril Toktay, 2012. "Relicensing as a Secondary Market Strategy," Management Science, INFORMS, vol. 58(5), pages 1022-1037, May.
    28. Xia, Qiu & Zhi, Bangdong & Wang, Xiaojun, 2021. "The role of cross-shareholding in the green supply chain: Green contribution, power structure and coordination," International Journal of Production Economics, Elsevier, vol. 234(C).
    29. Zhao, Senlin & Wang, Mengxiang & Zhou, Qin & Xia, Xiqiang, 2025. "Managing manufacturer encroachment and product conflicts in a closed-loop supply chain: The case of information asymmetry," Omega, Elsevier, vol. 132(C).
    30. Bian, Junsong & Zhang, Guoqing & Zhou, Guanghui, 2020. "Manufacturer vs. Consumer Subsidy with Green Technology Investment and Environmental Concern," European Journal of Operational Research, Elsevier, vol. 287(3), pages 832-843.
    31. He, Mengyu & Kang, Kai & Wei, Xuguang & Li, Yongjian, 2023. "Financing strategy of transnational supply chain with vertical shareholding under tax system difference: Creditor or guarantor?," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 169(C).
    32. Mostafa Farokhiani & Iman Nosoohi & Ali Shahandeh Nookabadi, 2025. "Product collection structures in closed-loop supply chains," Operational Research, Springer, vol. 25(1), pages 1-38, March.
    33. Hong, Xianpei & Govindan, Kannan & Xu, Lei & Du, Peng, 2017. "Quantity and collection decisions in a closed-loop supply chain with technology licensing," European Journal of Operational Research, Elsevier, vol. 256(3), pages 820-829.
    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. Yang, Lei & Gao, Muyi & Feng, Lipan, 2022. "Competition versus cooperation? Which is better in a remanufacturing supply chain considering blockchain," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 165(C).
    2. Li, Wei & Jin, Mingzhou & Galbreth, Michael R., 2024. "Should original equipment manufacturers authorize third-party remanufacturers?," European Journal of Operational Research, Elsevier, vol. 314(3), pages 1013-1028.
    3. 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).
    4. Nughthoh Arfawi Kurdhi & Shaunak S. Dabadghao & Jan C. Fransoo, 2024. "Should I endorse a third party? Authorization strategies for brand manufacturers in a refurbishing market," Flexible Services and Manufacturing Journal, Springer, vol. 36(4), pages 1253-1291, December.
    5. 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).
    6. 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.
    7. 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).
    8. 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).
    9. Lifeng Mu & Yan Wang & Vijayan Sugumaran, 2025. "OEM's optimal remanufacturing mode considering patent license under different commission contracts with platform," Electronic Commerce Research, Springer, vol. 25(3), pages 1753-1792, June.
    10. 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.
    11. Fang, Chang & Fan, Shuyi & Chi, Mingxiang & Wang, Weizhong, 2023. "The optimal remanufacturing strategy, returned quality choice and independent remanufacturers’ advantage for tackling extreme weather," International Journal of Production Economics, Elsevier, vol. 259(C).
    12. Zhou, Tao & Li, Kai, 2024. "Designing manufacturer’s new product technology for a closed-loop supply chain with consumer context effect," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 188(C).
    13. Ying Wu & Youwei Li, 2022. "Competition or Authorization—Manufacturers’ Choice of Remanufacturing Strategies," Sustainability, MDPI, vol. 14(19), pages 1-29, October.
    14. He, Qidong & Wang, Nengmin & Browning, Tyson R. & Jiang, Bin, 2022. "Competitive collection with convenience-perceived customers," European Journal of Operational Research, Elsevier, vol. 303(1), pages 239-254.
    15. Zichun Deng & Mohd Rizaimy Shaharudin & S. Sarifah Radiah Shariff & Ming-Lang Tseng, 2024. "Optimal Decisions in an Authorized Remanufacturing Closed-Loop Supply Chain under Dual-Fairness Concerns," Sustainability, MDPI, vol. 16(17), pages 1-22, September.
    16. 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).
    17. Qian, Zhifeng & Day, Steven James & Ignatius, Joshua & Dhamotharan, Lalitha & Chai, Junwu, 2024. "Digital advertising spillover, online-exclusive product launches, and manufacturer-remanufacturer competition," European Journal of Operational Research, Elsevier, vol. 313(2), pages 565-586.
    18. 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).
    19. 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.
    20. 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.

    More about this item

    Keywords

    ;
    ;
    ;
    ;

    Statistics

    Access and download statistics

    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:proeco:v:289:y:2025:i:c:s0925527325002865. 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/ijpe .

    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.