Dynamic pricing of a manufacturer producing new/remanufactured products with consideration of strategic green consumers

Abstract

<p style='text-indent:20px;'>Flourishing sales of new and remanufactured products have promp-ted firms to design different pricing strategies for strategic green consumer behavior. To this end, this paper studies a pricing strategy by developing a two-period game model in a remanufacturing system by considering the period and product discounts. Here, the manufacturer has two pricing strategies: <i>dynamic pricing</i> and <i>compensation pricing</i>. Unlike the extant literature on strategic consumers, this paper considers heterogeneous products existing in a remanufacturing system and focuses on how strategic/green consumption behavior affects the pricing strategy. The results through numerical studies indicate that when the consumers' preference for remanufactured products is high, or consumers are short-sighted, the manufacturers prefer a dynamic pricing strategy; in all other cases, a compensation pricing strategy is preferred. Conversely, a manufacturer looking to the long-term benefits favors a compensation pricing scenario. Overall, the green segment is beneficial to the manufacturer, especially when primary consumers show a high preference for remanufactured products.</p>