The impact of secondary market competition on refurbishing authorization strategies

Zhou, Qin; Meng, Chao; Yuen, Kum Fai

doi:10.1016/j.ijpe.2020.107728

Cited by 35 publications

(34 citation statements)

References 28 publications

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“…(2018), and Zhou et al. (2020). Although new products and remanufactured products can coexist in several periods and be introduced repeatedly, we do not consider multiperiod setting and all decisions are considered in a single‐period setting.…”

Section: Model Assumptions and Notationsmentioning

confidence: 97%

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An investigation of original equipment manufacturer's optimal remanufacturing mode and engagement strategy

Zhou

Yuen

2020

Int Trans Operational Res

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This study considers an original equipment manufacturer (OEM) who (a) relies on a contract manufacturer (CM) to produce its new products, and (b) engages the CM again or an independent remanufacturer (IR) to perform the remanufacturing operations of branded patented products through either authorization or outsourcing. This study chiefly investigates the optimal remanufacturing engagement strategy (i.e., engage a CM or an IR) and remanufacturing mode (i.e., authorization and outsourcing) that should be taken by an OEM. This paper derives the optimal responses of the three parties (i.e., OEM, CM, and IR) by comparing the outcomes of different remanufacturing engagement strategies and remanufacturing modes under two settings, depending on whether the wholesale price is exogenously or endogenously given. The results suggest that the OEM is better off adopting the authorization remanufacturing mode by either working with the CM or the IR when the wholesale price is exogenously given. When the wholesale price is endogenously determined by the CM, the best strategy for the OEM is to work with the IR using the outsourcing approach. The CM and the IR also show different preferences between the two modes. The IR or CM that engages in remanufacturing always prefers the outsourcing mode than the authorization mode in the two settings. However, when the CM does not engage in remanufacturing, it is better off adopting the authorization mode when the wholesale price is exogenously given or when the remanufacturing cost is relatively low in the endogenized wholesale price setting.

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Section: Model Assumptions and Notationsmentioning

confidence: 97%

“…Zhou et al. (2020) examined how the competition in the secondary market affected the OEM's authorization decisions, and identified the condition under which an authorization agreement can be reached between the OEM and IRs. However, the license fee payment may differ.…”

Section: Literature Reviewmentioning

confidence: 99%

An investigation of original equipment manufacturer's optimal remanufacturing mode and engagement strategy

Zhou

Yuen

2020

Int Trans Operational Res

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“…For instance, Hauser and Lund [10] find that only 6% of over 2000 remanufacturing firms are OEMs. A more common industry practice for the remanufacturing industry is that many OEMs cooperate with the IRs through a license agreement [11][12][13][14].…”

Section: Introductionmentioning

confidence: 99%

“…In the China market, Aihuishou and Ifengpai are both specialized IRs that offer remanufactured iPhone to the market. Ifengpai has been authorized by Apple for remanufacturing iPhones, whereas Aihuishou is still not authorized by Apple and engages in remanufacturing Apple's products independently [13]. In other words, Apple will provide all the necessary technology and know-how to Ifengpai so that it does not need to self-develop remanufacturing technology to remanufacture used products.…”

Section: Introductionmentioning

confidence: 99%

Impact of Intercompetitor Licensing on Remanufacturing Market Competition and Cooperation

Zhou

Yuen

Meng

et al. 2024

IEEE Trans. Eng. Manage.

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This research investigates the impact of intercompetitor licensing between an original equipment manufacturer (OEM) and an independent remanufacturer (IR) on (1) market competition between new and remanufactured products, (2) the IR's remanufacturing strategy, and (3) the IR's optimal quality choice for remanufactured products. In the considered supply chain, the OEM sells new products, and the IR collects used products and then sells remanufactured products to compete with the OEM. To produce remanufactured products, the IR can acquire remanufacturing technology either by paying a licensing fee to the OEM or self-developing it in-house by incurring a fixed research and development cost. We develop game-theoretic models to determine the optimal supply chain decisions concerning the royalty licensing fee, IR's remanufacturing strategy and production quality, and product sale prices.We find that a licensing contract will always induce the OEM and the IR to increase their sales price for new and remanufactured products. However, the OEM will always increase the sales price for new products to a larger degree than that of the IR. This can alleviate price competition between new and remanufactured products and make remanufactured products more competitive in the market. Under licensing cooperation, the IR will always remanufacture used products to a higher quality level which will intensify quality competition. No matter whether the royalty fee is exogenously or endogenously determined by the OEM, there exists a wide range of parameter regions such that a licensing contract will produce a win-win solution for the OEM and the IR. A licensing cooperation may be reached even when the unit royalty fee is at a relatively low level and the total royalty fee is higher than the selfdevelopment option.Managerial relevance statement: From a practical perspective, this study proposes how the OEM, and the IR should make licensing cooperation decision which aims to achieve a win-win solution. It also reveals that a royalty licensing contract can be mutually acceptable between the OEM and the IR in a wide range of parameter regions. This result is important for managers who want to engage in the 2 remanufacturing business. For the OEM, the result shows that licensing its remanufacturing technology at a low royalty fee may still be beneficial. For the IR, the result shows that seeking technology licensing may be more profitable even when the total paid royalty fee is higher than the cost of self-developing the technology. Strategic implications of royalty licensing on market competition, remanufacturing production strategy, and remanufacturing quality strategy should be carefully considered before making strategic decisions on remanufacturing and licensing cooperation.

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“…erefore, the recycler makes profits from recycling and refurbishing. Aihuishou reached a cooperation agreement with Huawei in 2017, and Huawei allowed Aihuishou to recycle and refurbish products [11]. Huawei dismantles and remanufacturers used products at the same time.…”

Section: Introductionmentioning

confidence: 99%

Pricing Strategies of Dual-Recycling Channels considering Refurbishing and Remanufacturing of WEEE

Tan

Wang

Zheng

et al. 2022

Mathematical Problems in Engineering

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This article studies pricing strategies of the dual-channel recycling supply chain where the manufacturer and the recycler compete on price in recycling waste electrical and electronic equipment (WEEE) and cooperate in disposing of them. This article is based on whether the recycler can refurbish and distinguish two different treatment methods of WEEE: refurbishment by the recycler and remanufacturing by the manufacturer. Two dual-channel recycling structures are proposed: (1) the recycler cannot refurbish when the manufacturer remanufactures; (2) the recycler can refurbish when the manufacturer remanufactures. By solving two Stackelberg game models, we derive pricing strategies. The impacts of recycled products’ quality and base profit for remanufacturing and refurbishing on pricing strategies are discussed. We find that the recycler prefers refurbishing when its base profit for refurbishment is greater than the manufacturer’s base profit for remanufacturing, rather than the transfer price. Interestingly, the recycler’s refurbishment does not reduce the manufacturer’s profits but creates a win-win situation through their cooperation. Furthermore, the better quality of recycled products and the higher base profit for refurbishing and remanufacturing can bring more profit to the recycler and the manufacturer, increase the recycling prices, improve the efficiency of resource utilization, and reduce environmental pollution.

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The impact of secondary market competition on refurbishing authorization strategies

Cited by 35 publications

References 28 publications

An investigation of original equipment manufacturer's optimal remanufacturing mode and engagement strategy

An investigation of original equipment manufacturer's optimal remanufacturing mode and engagement strategy

Impact of Intercompetitor Licensing on Remanufacturing Market Competition and Cooperation

Pricing Strategies of Dual-Recycling Channels considering Refurbishing and Remanufacturing of WEEE

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