Competition between a manufacturer and a relicensing third party when customers are strategic

Abstract

AbstractThis study presents an analytical framework for examining how remanufacturing rate, consumer buying behavior, and consumer preferences impact a supply chain's economic and environmental outcomes. An original equipment manufacturer and a third‐party remanufacturer make decisions influenced by the competitive leverage of relicensing fees and the maximum available quantity of remanufactured products. We analyze this monopoly scenario in a two‐period model, assuming that consumers are strategic. The remanufacturing rate has a nonmonotonic impact on the economic outcomes of this supply chain system, and excellent environmental improvement is not an inevitable consequence of a high remanufacturing rate.