We consider an original equipment manufacturer (OEM) who faces competition from an independent remanufacturer (IR). The OEM decides the quality of the new product, which also determines the quality of the competing remanufactured product. The OEM and the IR then competitively determine their production quantities. We explicitly characterize how the OEM competes with the IR in equilibrium. Specifically, we show that the OEM relies more on quality as a strategic lever when it has a stronger competitive position (determined by the relative cost and value of new and remanufactured products), and in contrast it relies more heavily on limiting quantity of cores when it has a weaker competitive position. The IR's entry threat as well as its successful entry can decrease the consumer surplus. Furthermore, our results illustrate that ignoring the competition or the OEM's quality choice leads to overestimating benefits of remanufacturing for consumer and social welfare. In addition, we show an IR with either a sufficiently weak competitive position (so the OEM deters entry) or a sufficiently strong one (so the OEM is forced to limit quantity of cores) is desirable for reducing the environmental impact. Comparing our results with the benchmark in which the OEM remanufactures suggests that encouraging IRs to remanufacture in lieu of the OEMs may not benefit the environment. Furthermore, the benchmark illustrates that making remanufacturing more attractive improves the environmental impact when the remanufacturer is the OEM, while worsening it when remanufacturing is done by the IR.

A s waste from used electronic products grows steadily, manufacturers face take-back regulations mandating its collection and proper treatment through recycling, or remanufacturing. Environmentalists greet such regulation with enthusiasm, but its effect on remanufacturing activity and industry competition remains unclear. We research these questions, using a stylized model with an original equipment manufacturer (OEM) facing competition from an independent remanufacturer (IR). We examine the effects of regulation on three key factors: remanufacturing levels, consumer surplus, and the OEM profit. First, we find that total OEM remanufacturing actually may decrease under high collection and/or reuse targets, meaning more stringent targets do not imply more remanufacturing. Consumer surplus and the OEM profit, meanwhile, may increase when OEM-IR competition exists in a regulated market. Finally, through a numerical study, we investigate how total welfare changes in the collection target, what happens when the cost of collection is not linear, and what happens when IR products are valued differently by consumers. Production and Operations Management 26(5),

In the last two decades, many countries have enacted product take-back legislation that holds manufacturers responsible for the collection and environmentally sound treatment of end-of-use products. In an industry regulated by such legislation, we consider a manufacturer that also sells remanufactured products under its brand name. Using a stylized model, we consider three levels of legislation: no take-back legislation, legislation with collection targets, and legislation with collection and reuse targets. We characterize the optimal solution for the manufacturer and analyze how various levels of legislation affect manufacturing, remanufacturing, and collection decisions. First, we explore whether legislation with only collection targets causes an increase in remanufacturing levels, which is argued to be an environmentally friendlier option for end-of-use treatment than other options such as recycling. While increased remanufacturing alone is usually perceived as a favorable environmental outcome, if one considers the overall environmental impact of new and remanufactured products, this might not be the case. To study this issue, we model the environmental impact of the product following a life cycle analysis-based approach. We characterize the conditions under which increased remanufacturing due to take-back legislation causes an increase in total environmental impact. Finally, we model the impact of legislation on consumer surplus and manufacturer profits and identify when total welfare goes down because of legislation. Subject Areas: Remanufacturing, Take-Back Legislation, and Life CycleAnalysis. * We gratefully acknowledge the insightful and helpful suggestions provided by the editors and two anonymous reviewers. We are also grateful to Prof. A. Atasu and M.J. Rungtusanatham for their helpful feedback.

P roduct take-back regulation, under which firms finance the collection and treatment of their end-of-life products, is a widely used environmental program. One of the most common compliance schemes is collectively with cost allocation by market share. As an alternative, individual compliance scheme is considered. Assuming that firms can choose their compliance scheme, we compare these two schemes with respect to the costs they impose on firms and environmental benefits. We show that high collection targets and large market shares among firms in a collective compliance scheme make it more cost-effective. From an environmental benefits perspective, the prevailing intuition is that collection rates will be higher under collective schemes but individual compliance will provide more incentive for higher recyclability levels. Our results challenge both of these premises. We identify conditions under which collection rates are higher when firms comply individually and recyclability levels are higher when firms comply collectively and allocate costs with respect to market shares.

How should the excess profit because of inventory pooling be shared amongst firms at different levels along the supply chain? Suppose each of several retailers observes local demand for a common item and places an order at the supplier, which is immediately filled if the supplier has the item in stock. The supplier can fill retailer orders either from their reserved inventories or from a shareable pool of inventory. Using terminology from cooperative game theory, we say that the supplier and the retailers whose orders are filled from the common pool have formed an inventory-pooling coalition and study the use of Shapley value to allocate the expected excess profit because of pooling. We find that under Shapley value allocations the retailers have incentive to join the inventory-pooling coalition, and the supplier carries the level of inventory that is optimal for the coalition. Shapley value allocations might not lie within the core of the game, but the grand coalition of all players is stable in the farsighted sense. And, although the supplier's share of the expected excess profit is largest when all the retailers participate in the inventory-pooling coalition, the allocations to the retailers may diminish as the coalition grows. Colluding against the supplier (by merging and forming larger retailers) may seem like an appealing strategy for the retailers to increase their share of the total supply chain profit, but we find that the total expected after-pooling profits of retailers may instead go down because of collusion.supply chain management, incentives and contracting