Optimal pricing decisions under the coexistence of “trade old for new” and “trade old for remanufactured” programs

Ma, Zhenjun; Zhou, Qin; Ding, Ying; Sheu, Jiuh‐Biing

doi:10.1016/j.tre.2017.08.012

Cited by 85 publications

(47 citation statements)

References 31 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…In terms of consumers, the utility of remanufactured products is higher than that of used products but lower than that of new products; hence, assume 0 < β < α < 1, which is in line with prior literature (Souza 2013; Han 2017) [8,44]. In the first stage, consumers determine whether they purchase new products or not on the basis of the product utility.…”

Section: Consumersmentioning

confidence: 77%

“…Their study shows that a rise in government subsidies and a drop in durability can stimulate consumers to participate in TOR programs, and the involvement of TOR programs can increase recycling rates of products [7]. For a scenario in which TON and TOR coexist, Ma et al (2017) explore the optimal pricing decisions of enterprises and determine the threshold at which enterprises should provide TON and TOR, and they discuss the optimal strategies for enterprises if government subsidies are subject to budget limits [8]. For the case of cannibalization between new products and remanufactured products, Zhu and Wang (2018) look into the optimal pricing strategies for mixed trade in TON and TOR supply chains [24].…”

Section: Trade-old-for-new (Remanufactured) Literaturementioning

confidence: 99%

“…For example, the Chinese government announced pilot TOR programs in 2013 to push remanufacturing and improve environmental performance. Subsequently, 10 automobile and engine manufacturers were chosen as pilot enterprises for TOR programs [8]. TON can stimulate the demand for new products, while TOR can accelerate the demand for remanufactured products.…”

Section: Introductionmentioning

confidence: 99%

See 2 more Smart Citations

Trade-Old-for-Remanufactured Closed-Loop Supply Chains with Carbon Tax and Government Subsidies

et al. 2018

View full text Add to dashboard Cite

The constantly increasing CO2 emissions are threatening the environment tremendously. Facing the pressure of environmental activists and public opinion, businesses and governments are taking action to reduce carbon emissions. Among these endeavors, carbon tax and subsidy policies proposed by governments are widely adopted. Remanufacturing is believed to save manufacturing costs and reduce carbon emissions from the process of enterprise operation, and it is increasingly being accepted by enterprises. However, different consumers’ willingness to pay for remanufactured products and the durability of new products will also affect consumers’ willingness to buy remanufactured products. Therefore, considering the discrepancy between consumer willingness to pay and product durability, we established the trade-old-for-remanufactured (TOR) model for a scenario of carbon tax and government subsidies. Through the analysis of the model, we obtained the optimal pricing and production decisions of manufacturers (remanufacturers) in the case of carbon tax and government subsidies. Our results show that, when there is no carbon tax constraint, the increase in consumer willingness to pay and the adjustment in product durability can stimulate consumers to participate in TOR projects and augment enterprises’ profits. However, it can also lead to a carbon rebound that increases corporate carbon emissions. When there is a carbon tax constraint, the introduction of carbon tax contributes to a reduction in carbon emissions, while enterprises tend to lose profits. In order to achieve a “win-win” between corporate profits and carbon emissions, we considered government subsidy policies. Our numerical examples illustrate that appropriate carbon tax and government subsidies can curb carbon emissions and also increase profits for enterprises.

show abstract

Section: Consumersmentioning

confidence: 77%

Section: Trade-old-for-new (Remanufactured) Literaturementioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

See 1 more Smart Citation

Trade-Old-for-Remanufactured Closed-Loop Supply Chains with Carbon Tax and Government Subsidies

et al. 2018

View full text Add to dashboard Cite

show abstract

“…Kleber et al [21] addressed the question whether a buyback option should be offered by OEMs to retailers, and which buyback price should be paid for each returned core by using a deterministic framework. Additionally, trade-ins have been widely used in recent years due to many economic motivations and psychological reasons that make firms offer trade-in deals rather than other promotion or collection options [22]. By offering trade-ins, firms can create switching costs [23,24], disable the secondhand market of an old technology [25], increase the purchasing frequency of a quasi-durable good [26], or alleviate the regret of consumers who have bought the old-generation products and encourage them to upgrade to new generations [27].…”

Section: Literature Reviewmentioning

confidence: 99%

To License or Not to License Remanufacturing Business?

Zhou

Ding

et al. 2018

Sustainability

Self Cite

View full text Add to dashboard Cite

Many original equipment manufacturers (OEMs) face the choice of whether to license an independent remanufacturer (IR) to remanufacture their used products. In this paper, we develop closed-loop supply chain models with licensed and unlicensed remanufacturing operations to analyze the competition and cooperation between an OEM and an IR. The OEM sells new products and collects used products through trade-ins, while the IR intercepts the OEM's cores to produce remanufactured products and sell them in the same market. We derive optimal decisions for each of the two types of firms in licensed and unlicensed remanufacturing scenarios and identify conditions under which the OEM and the IR would be most likely to cooperate with each other in implementing remanufacturing. The results show although it is beneficial for an OEM to license an IR to remanufacture its cores, it is not always necessary for an IR to accept OEM's authorization. Moreover, we contrast the result for licensed remanufacturing scenario in the decentralized system with that in the centrally coordinated system to quantify potential inefficiency resulting from decentralization of decision making.

show abstract

“…However, due to low consumers' acceptance for remanufactured products [5,10], the marketing share of remanufactured product is less than 5% [11], and the growth of the remanufacturing industry in China still lags behind some developed countries [12]. Hence a key issue that should be addressed first is how to effectively attract more consumers to remanufactured products [13]. Establishing reasonable pricing schemes [12] or providing government consumption subsidies [9] are two important solutions to this problem.…”

Section: Introductionmentioning

confidence: 99%

Optimal Pricing Strategy and Government Consumption Subsidy Policy in Closed-Loop Supply Chain with Third-Party Remanufacturer

et al. 2020

View full text Add to dashboard Cite

Due to the increasing awareness of sustainable manufacturing, remanufacturing has been widely accepted by enterprises in many countries. In the process of Closed-Loop Supply Chain (CLSC) development, to stimulate the demand for remanufactured products, the Chinese government’s interventions such as the “Trade old for Remanufactured” program cannot be ignored. However, prior research has not answered the questions of whether governments should offer consumption subsidies and how to determine the optimal subsidy value. This paper investigates the optimal government consumption subsidy policy and its impact on the operation of Closed-Loop Supply Chain (CLSC) where an Original Equipment Manufacturer (OEM) produces new products, while a Third-Party Remanufacturer (TPR) remanufactures the used products collected from consumers. A game model with a leader (government) and two followers (OEM and TPR) is then introduced. The government determines the consumption subsidy to maximize the social welfare, while the TPR and OEM attempt to maximize their own profit functions. Game theoretic models are proposed to explore and compare the scenarios, i.e., CLSC with a consumption subsidy policy and without a consumption subsidy policy. The equilibrium characteristics with respect to the government’s consumption subsidy decisions and the price decisions for chain members are derived. Based on the theoretical and numerical analysis, the results show that: (1) governments should not always offer a consumption subsidy; (2) the consumption subsidy cannibalizes demand for new products while boosting the demand for remanufactured products; (3) the consumption subsidy should be shared between the TPR and consumers when the TPR raises the sales price of remanufactured product; (4) the members of the CLSC do not always benefit from the consumption subsidy policy.

show abstract

Optimal pricing decisions under the coexistence of “trade old for new” and “trade old for remanufactured” programs

Cited by 85 publications

References 31 publications

Trade-Old-for-Remanufactured Closed-Loop Supply Chains with Carbon Tax and Government Subsidies

Trade-Old-for-Remanufactured Closed-Loop Supply Chains with Carbon Tax and Government Subsidies

To License or Not to License Remanufacturing Business?

Optimal Pricing Strategy and Government Consumption Subsidy Policy in Closed-Loop Supply Chain with Third-Party Remanufacturer

Contact Info

Product

Resources

About