On the Competition between Two Modes of Product Recovery: Remanufacturing and Refurbishing

Abstract

The markets for recovered products in China typically consist of both remanufactured and refurbished products. The government requires that the remanufactured product match the quality level of the new product, while no such requirements exist for the refurbished product. Furthermore, remanufacturing is a relatively new phenomenon in China, whereas the refurbishing industry is old, widespread, and largely unregulated. Compared to the new product, the two types of recovered products enjoy a cost advantage, but they suffer from a lower willingness‐to‐pay in the consumer market. These observations lead to a game‐theoretic model consisting of three players: an original equipment manufacturer (OEM) providing the new product, a remanufacturing firm, and a refurbishing firm. The goal is to understand what equilibrium market structure may arise and how the equilibrium outcome depends on some of the key model parameters. It is found that (1) the entry barrier for the remanufacturer is always higher than that for the refurbisher; (2) remanufacturing almost always reduces the environmental and social (E/S) impact of the secondary market (for spare parts), such as the consumption of raw materials and energy during parts production, emissions and safety concerns during product use, and the E/S impact incurred during product disposal; and (3) the OEM has a natural tendency to discourage any form of product recovery by a third party, refurbishing or remanufacturing. These findings have potential policy implications for the government’s effort in cultivating the remanufacturing industry.

Optimal Decisions and Implementation Efficiency of the Extended Producer Responsibility System for E-Waste under Take-Back Legislations

“…Remanufacturing is recognized as the most effective product recovery option and studied by many scholars. Some scholars focus on introducing remanufacturing market [23], optimizing remanufacturing cost [7], the consumer's perceived value of the remanufactured product [24], the production and pricing of the remanufactured product [25,26], and economic profit [27][28][29]. Wang et al [3] found that the manufacturer disposes the used products by recycling, remanufacturing, and innocent treatment and determines the optimal portfolio of product recovery options and environmental impacts of different portfolios.…”

Distribution Channel and Remanufacturing Strategy Selection

“…e market size is normalized to 1. Consumers typically value the remanufactured product less than the new product [6,[28][29][30]. us, we assume that if a consumer is willing to pay θ for a new product, then his WTP for a remanufactured product is δθ, where δ(0 < δ < 1) is a discount factor for the remanufactured product.…”

Refurbished or Remanufactured?—An Experimental Study on Consumer Choice Behavior

“…It can be seen that the existing studies at home and abroad are based on the assumption that remanufacturing is the only recycled product in the market, ignoring the fact that there may be low-quality recycled products in the actual market. In order to better analyze the development dilemma and complex market environment faced by Chinese remanufacturing enterprises, our research team studied the market competition of remanufacturing, renovation, and new products ( Chen and Chen, 2019 ) with a theoretical modeling method on the one hand, and analyzed Chinese consumers’ remanufacturing purchasing behavior and decision-making process with an empirical method on the other hand ( Chen et al, 2019 ). This paper introduces the purchase experiment in our empirical study, examines the process of consumers’ purchase of different products, and studies the influence of refurbished products on the purchase choice of remanufactured products and the influencing factors of consumers’ WTP for remanufactured products.…”

“…According to the definition of product recycling by Thierry et al (1995) , Ortegon et al (2014) , the product recycling method can be divided into five categories: repair, refurbishing, remanufacturing, cannibalization, and recycling ( Figure 1 ) according to the disassembly degree of the product in the process. Among them, the purpose of refurbishment is to recycle the used products and to continue to put them into the market after reaching a certain quality standard, which is lower than the quality standard of the new product; the purpose of remanufacturing is to make the second-hand products meet the same quality standards of the new products before putting them into the market ( Chen and Chen, 2019 ).…”