Only the Friendly Face? The Consequences of Consumer Education for Green Consumerism in Remanufacturing

Abstract

Empirical studies suggest that investing in consumer education on green consumption not only naturally induces environmental sustainability but also yields various economic benefits for the original equipment manufacturers (OEMs). However, as far as we know, these studies overlook the potential cannibalization of new product sales. By developing a theoretical model that involves consumer education on green consumption when choosing between in-house or outsourcing remanufacturing, we find that if allowing the flexibility of remanufacturing outsourcing, consumer education on green consumption introduces opportunities for opportunistic behaviors that can compromise both profitability and environmental objectives. Specifically, when OEMs engage in remanufacturing, either in-house or through outsourcing, we observe that the incentive to invest in consumer education on green consumption is greater for in-house remanufacturing compared to outsourcing. This heightened incentive for consumer education enables OEMs to maintain higher profits under remanufacturing in-house, which results in a threat to environmental sustainability.