Pricing strategies for new product and remanufactured product considering emission sensitive demand

Abstract

With the rapidly increasing concern on environmental pollution and resource shortage, remanufactured products attract many attentions. In order to determine the optimal production and pricing strategy, we construct decision models for both single-product market and mixed-product market. Consumers’ different preferences for new products and remanufactured products are considered. First, we construct pricing models for a single-product market, and achieve a judging condition to determine the optimal strategy. Second, we develop a pricing model for a multiple-product market and put forward a suppose to show that the multiple-product strategy is not always optimal. Finally, numerical illustrations are designed to examine the impacts of the two crucial factors and obtain the dominant regions for each strategy. By introducing an emission sensitive demand, we show the superiority of the remanufactured product when the extra demand attracted by the emission saving is large.