The profitability of remanufacturing systems for different cost, technology, and logistics structures has been extensively investigated in the literature. We provide an alternative and somewhat complementary approach that considers demand-related issues, such as the existence of green segments, original equipment manufacturer competition, and product life-cycle effects. The profitability of a remanufacturing system strongly depends on these issues as well as on their interactions. For a monopolist, we show that there exist thresholds on the remanufacturing cost savings, the green segment size, market growth rate, and consumer valuations for the remanufactured products, above which remanufacturing is profitable. More important, we show that under competition remanufacturing can become an effective marketing strategy, which allows the manufacturer to defend its market share via price discrimination.remanufacturing, product returns, price discrimination, competition

This article discusses the diffusion process in an online social network given the individual connections between members. The authors model the adoption decision of individuals as a binary choice affected by three factors: (1) the local network structure formed by already adopted neighbors, (2) the average characteristics of adopted neighbors (influencers), and (3) the characteristics of the potential adopters. Focusing on the first factor, the authors find two marked effects. First, an individual who is connected to many adopters has a greater adoption probability (degree effect). Second, the density of connections in a group of already adopted consumers has a strong positive effect on the adoption of individuals connected to this group (clustering effect). The article also records significant effects for influencer and adopter characteristics. For adopters, specifically, the authors find that position in the entire network and some demographic variables are good predictors of adoption. Similarly, in the case of already adopted individuals, average demographics and global network position can predict their influential power on their neighbors. An interesting counterintuitive finding is that the average influential power of individuals decreases with the total number of their contacts. These results have practical implications for viral marketing, a context in which a variety of technology platforms are increasingly considering leveraging their consumers' revealed connection patterns. The model performs particularly well in predicting the next set of adopters.

T he Internet has increased the flexibility of retailers, allowing them to operate an online arm in addition to their physical stores. The online channel offers potential benefits in selling to customer segments that value the convenience of online shopping, but it also raises new challenges. These include the higher likelihood of costly product returns when customers' ability to "touch and feel" products is important in determining fit. We study competing retailers that can operate dual channels ("bricks and clicks") and examine how pricing strategies and physical store assistance levels change as a result of the additional Internet outlet. A central result we obtain is that when differentiation among competing retailers is not too high, having an online channel can actually increase investment in store assistance levels (e.g., greater shelf display, more-qualified sales staff, floor samples) and decrease profits. Consequently, when the decision to open an Internet channel is endogenized, there can exist an asymmetric equilibrium where only one retailer elects to operate an online arm but earns lower profits than its bricks-only rival. We also characterize equilibria where firms open an online channel, even though consumers only use it for research and learning purposes but buy in stores. A number of extensions are discussed, including retail settings where firms carry multiple product categories, shipping and handling costs, and the role of store assistance in impacting consumer perceived benefits.

Conventional wisdom seems to claim that, by lowering the cost of distribution and by making search easier for consumer, the introduction of the Internet is likely to intensify price competition. This paper intends to challenge this view by asking: When and how is the Internet likely to decrease the level of price competition between firms? To answer this question, we develop an analytic model with the following characteristics. On the demand side, consumers need to gather information on two types of product attributes: (which can be communicated on the Web at very low cost) and (for which physical inspection of the product is necessary). Consumers choose between two brands but are familiar with the nondigital attributes of only the brand purchased on the last purchase occasion. On the supply side, firms use traditional stores and the Internet to inform consumers about their products' attributes and to sell their products. In this setup, we show that the impact of the Internet on competition will be radically different depending on the relative importance of parameters describing the relevant shopping and distribution context. Specifically, we find that the introduction of the Internet might lead to monopoly pricing when (1) the proportion of Internet users is high enough, (2) when nondigital attributes are relevant but not overwhelming, (3) when consumers have a more favorable prior about the brand they currently own, and (4) when the purchase situation can be characterized by “destination shopping”. More surprising, we also show that in such cases, the use of the Internet not only leads to higher prices but can also discourage consumers from engaging in search. As such, an important message of the paper is that under some conditions the Internet might represent an opportunity for firms to leverage their brand loyalty and increase their profits. The intuition behind our results is the following. The Internet allows consumers to evaluate digital attributes easily, i.e., without visiting the stores. However, nondigital attributes can only be evaluated through physical presence. As such, for goods where both types of attributes are important, the introduction of the Net changes the effective cost of search for consumers. Without the Internet the cost of search is . With the introduction of the Net however, nonsearching consumers do not have to undertake the shopping trip at all because they can order products on the Net. Thus, in the presence of the Internet the cost of search is related to . In the case of destination shopping (i.e. when the fixed cost of undertaking the shopping trip is higher than the cost of visiting an additional store), the presence of the Internet creates higher effective search costs for consumers. Given this shift of paradigm in search costs due to the Internet, consumers may not take the risk of searching for products with better nondigital attributes, but instead, remain with the product they are familiar with. This results in increased consumer loyalty, which induces firms to increase th...

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