Competing refurbishment in a supply chain with different selling modes

This study focuses on the optimal pricing and product refurbishing decisions of an original equipment manufacturer (OEM) and a retailer in a supply chain. The OEM sells the new product through a retailer, which serves as a reseller or selling agency, and then chooses whether to provide the refurbished product to consumers. By constructing four models, we obtain the following results. First, we show that the OEM and the retailer always prefer to sell a refurbished product as a monopoly. Second, competing refurbishments leads to a prisoner’s dilemma in which both parties suffer greater losses compared to the no refurbishment scenario. This implies that competing refurbishments, except for product cannibalization, hinder the refurbishing industry. Finally, with different refurbishers, the OEM has different preferences for a new product’s selling format. However, when the retailer serves as the sole refurbisher, the OEM always prefers agency mode.