Channel choice for an independent remanufacturer considering environmentally responsible consumers

Abstract

This paper studies the channel choice of an independent remanufacturer who considers whether to add a direct channel to its retail channel in the presence of environmentally responsible consumers. Two scenarios, depending on whether there is competition between the remanufacturer and the manufacturer with new products, are explored. When there is no competition, we find that (i) adding a direct channel lowers the wholesale price; (ii) a higher proportion of green consumers, attention degree of the remanufacturer's green image, or cost savings per remanufactured product strengthens the remanufacturer's motivation to add a direct channel; (iii) the remanufacturer has a low incentive to add a direct channel if the total surplus of the retail channel or extra fixed cost of introducing direct channel is high; (iv) the direct channel addition hurts the retailer if the acceptance degree of direct channel is not low. However, when there exists a competition, we find that (i) the competition can influence how cost savings and acceptance degree of direct channel affect the remanufacturer's channel choice; (ii) the remanufacturer and the retailer can achieve a win-win situation under dual channels if the acceptance degree of remanufactured products or direct channel is low, or their standard deviations are high; and (iii) adding a direct channel increases the remanufacturer's ability to resist uncertainty of consumers' behaviors.