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Third-party remanufacturing mode selection: Outsourcing or authorization?

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  • Zou, Zong-Bao
  • Wang, Jian-Jun
  • Deng, Gui-Shi
  • Chen, Haozhe

Abstract

Many original equipment manufacturers (OEMs) allow third-party remanufacturers (3PRs) to perform remanufacturing operations of branded or patented products – through either outsourcing or authorization. This study compares these two modes by modeling the game between the OEM and the 3PR on equilibrium quantities, prices, and profits. The results suggest that when consumers perceive the remanufactured products with a low value, the 3PR prefers the authorization approach; otherwise the 3PR prefers the outsourcing approach. However, in both scenarios, the OEM obtains higher profit through outsourcing than through authorization. Our further analysis compares two modes’ impacts on consumer surplus, social welfare, and environment.

Suggested Citation

  • 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.
  • Handle: RePEc:eee:transe:v:87:y:2016:i:c:p:1-19
    DOI: 10.1016/j.tre.2015.12.008
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    References listed on IDEAS

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    Cited by:

    1. Chen, Yuyu & Li, Bangyi & Zhang, Guoqing & Bai, Qingguo, 2020. "Quantity and collection decisions of the remanufacturing enterprise under both the take-back and carbon emission capacity regulations," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 141(C).
    2. Huihui Liu & Xiaohang Yue & Hui Ding & G. Keong Leong, 2017. "Optimal Remanufacturing Certification Contracts in the Electrical and Electronic Industry," Sustainability, MDPI, Open Access Journal, vol. 9(4), pages 1-17, March.
    3. 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.
    4. Yande Gong & Mengze Chen & Yuliang Zhuang, 2019. "Decision-Making and Performance Analysis of Closed-Loop Supply Chain under Different Recycling Modes and Channel Power Structures," Sustainability, MDPI, Open Access Journal, vol. 11(22), pages 1-26, November.
    5. 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, Open Access Journal, vol. 10(5), pages 1-22, May.
    6. Yan Liu & Yongsheng Cheng & Hong Chen & Sidai Guo & Yujia Lu, 2018. "Selling Remanufactured Products under One Roof or Two? A Sustainability Analysis on Channel Structures for New and Remanufactured Products," Sustainability, MDPI, Open Access Journal, vol. 10(7), pages 1-20, July.
    7. Ponte, Borja & Naim, Mohamed M. & Syntetos, Aris A., 2019. "The value of regulating returns for enhancing the dynamic behaviour of hybrid manufacturing-remanufacturing systems," European Journal of Operational Research, Elsevier, vol. 278(2), pages 629-645.
    8. Zheng, Xiao-Xue & Liu, Zhi & Li, Kevin W. & Huang, Jun & Chen, Ji, 2019. "Cooperative game approaches to coordinating a three-echelon closed-loop supply chain with fairness concerns," International Journal of Production Economics, Elsevier, vol. 212(C), pages 92-110.
    9. Qiang Guo & Zenglu Li & Jiajia Nie, 2019. "Strategic Analysis of the Online Recycler’s Reselling Channel Selection: Agency or Self-Run," Sustainability, MDPI, Open Access Journal, vol. 12(1), pages 1-19, December.
    10. Wei Yan & Junwu Chai & Zhifeng Qian & Sang-Bing Tsai & Hong Chen & Yu Xiong, 2018. "Operational Decisions on Remanufacturing Outsourcing Involved with Corporate Environmental and Social Responsibility—A Sustainable Perspective," Sustainability, MDPI, Open Access Journal, vol. 10(4), pages 1-18, April.
    11. Wang, Nengmin & He, Qidong & Jiang, Bin, 2019. "Hybrid closed-loop supply chains with competition in recycling and product markets," International Journal of Production Economics, Elsevier, vol. 217(C), pages 246-258.
    12. Zheng, Xiao-Xue & Li, Deng-Feng & Liu, Zhi & Jia, Fu & Sheu, Jiuh-Biing, 2019. "Coordinating a closed-loop supply chain with fairness concerns through variable-weighted Shapley values," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 126(C), pages 227-253.
    13. Weisheng Deng, 2019. "Does Remanufacturing Always Benefit the Manufacturer and Hurt the Supplier?," Sustainability, MDPI, Open Access Journal, vol. 11(6), pages 1-13, March.
    14. Qiu, Yuzhuo & Ni, Ming & Wang, Liang & Li, Qinqin & Fang, Xuanjing & Pardalos, Panos M., 2018. "Production routing problems with reverse logistics and remanufacturing," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 111(C), pages 87-100.
    15. Wang, Wenbin & Yang, Siqi & Xu, Lei & Yang, Xiaoli, 2019. "Carrot/stick mechanisms for collection responsibility sharing in multi-tier closed-loop supply chain management," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 125(C), pages 366-387.
    16. Zongbao Zou & Fan Wang & Xiaofan Lai & Jingxian Hong, 2019. "How Does Licensing Remanufacturing Affect the Supply Chain Considering Customer Environmental Awareness?," Sustainability, MDPI, Open Access Journal, vol. 11(7), pages 1-23, March.
    17. 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.
    18. He, Qidong & Wang, Nengmin & Yang, Zhen & He, Zhengwen & Jiang, Bin, 2019. "Competitive collection under channel inconvenience in closed-loop supply chain," European Journal of Operational Research, Elsevier, vol. 275(1), pages 155-166.
    19. Huang, Yanting & Wang, Zongjun, 2017. "Information sharing in a closed-loop supply chain with technology licensing," International Journal of Production Economics, Elsevier, vol. 191(C), pages 113-127.
    20. Wei Yan & Hengyu Li & Junwu Chai & Zhifeng Qian & Hong Chen, 2018. "Owning or Outsourcing? Strategic Choice on Take-Back Operations for Third-Party Remanufacturing," Sustainability, MDPI, Open Access Journal, vol. 10(1), pages 1-18, January.
    21. Dexiang Yang & Lei Zhang & Ying Wu & Sidai Guo & Hua Zhang & Lijian Xiao, 2018. "A Sustainability Analysis on Retailer’s Sales Effort in A Closed-Loop Supply Chain," Sustainability, MDPI, Open Access Journal, vol. 11(1), pages 1-20, December.
    22. Wei He & Lan Liang & Kai Wang, 2020. "Economic and Environmental Implications of Quality Choice under Remanufacturing Outsourcing," Sustainability, MDPI, Open Access Journal, vol. 12(3), pages 1-18, January.

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