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Remanufacturing, Third-Party Competition, and Consumers' Perceived Value of New Products

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  • Vishal V. Agrawal

    () (McDonough School of Business, Georgetown University, Washington, DC 20057)

  • Atalay Atasu

    () (Scheller College of Business, Georgia Institute of Technology, Atlanta, Georgia 30332)

  • Koert van Ittersum

    () (Faculty of Economics and Business, Department of Marketing, University of Groningen, 9747 AE Groningen, The Netherlands)

Abstract

In this paper, we investigate whether and how the presence of remanufactured products and the identity of the remanufacturer influence the perceived value of new products through a series of behavioral experiments. Our results demonstrate that the presence of products remanufactured and sold by the original equipment manufacturer (OEM) can reduce the perceived value of new products by up to 8%. However, the presence of third-party-remanufactured products can increase the perceived value of new products by up to 7%. These results suggest that deterring third-party competition via preemptive remanufacturing may reduce profits, whereas the presence of third-party competition may actually be beneficial for an OEM. This paper was accepted by Serguei Netessine, operations management.

Suggested Citation

  • 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.
  • Handle: RePEc:inm:ormnsc:v:61:y:2015:i:1:p:60-72
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    File URL: http://dx.doi.org/10.1287/mnsc.2014.2099
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    1. repec:eee:ejores:v:269:y:2018:i:2:p:661-681 is not listed on IDEAS
    2. repec:eee:proeco:v:190:y:2017:i:c:p:120-132 is not listed on IDEAS
    3. repec:eee:proeco:v:199:y:2018:i:c:p:78-94 is not listed on IDEAS
    4. repec:eee:ejores:v:262:y:2017:i:3:p:1009-1027 is not listed on IDEAS
    5. repec:gam:jsusta:v:10:y:2018:i:2:p:347-:d:129262 is not listed on IDEAS
    6. repec:eee:transe:v:111:y:2018:i:c:p:87-100 is not listed on IDEAS
    7. Batabyal, Amitrajeet & Beladi, Hamid, 2017. "How Transport Costs Affect the Decision to Purchase a New or a Remanufactured Good," MPRA Paper 85315, University Library of Munich, Germany, revised 03 Mar 2018.
    8. Genc, Talat S. & De Giovanni, Pietro, 2018. "Optimal return and rebate mechanism in a closed-loop supply chain game," European Journal of Operational Research, Elsevier, vol. 269(2), pages 661-681.
    9. repec:eee:ejores:v:269:y:2018:i:3:p:1027-1040 is not listed on IDEAS
    10. Han, Xiaohua & Wu, Haiyan & Yang, Qianxia & Shang, Jennifer, 2016. "Reverse channel selection under remanufacturing risks: Balancing profitability and robustness," International Journal of Production Economics, Elsevier, vol. 182(C), pages 63-72.
    11. repec:eee:proeco:v:193:y:2017:i:c:p:602-616 is not listed on IDEAS

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