Impact of Trade-In Remanufacturing Policy and Consumer Behavior on Remanufacturer Decisions

Zhen Wang,Yongrui Duan,Jiazhen Huo

doi:10.3390/su12155980

Abstract

To develop more competitive strategies for different types of remanufacturing companies under the trade-in remanufacturing policy, this paper investigates the impact of the trade-in remanufacturing policy and consumer choice behavior on decisions of a traditional brand remanufacturer and a third-party brand remanufacturer by using a consumer utility model. The results suggest that the trade-in remanufacturing policy increases demand for the third-party brand, but does not increase demand for the traditional brand. Further, although trade-in remanufacturing policy increases both brand prices, it also increases consumer surplus and corporate profits. Neither the traditional brand remanufacturer nor the third-party brand remanufacturer can completely monopolize the remanufacturing market. In this situation, the traditional brand remanufacturer should strive to increase consumer loyalty, and the third-party brand remanufacturer should strive for consumer recognition of third-party remanufactured products.

Highlights

The introduction of the trade-in remanufacturing policy for automotive engines has attracted traditional automotive engine manufacturers to expand their business into the remanufacturing market, but it has attracted many third-party automotive engine remanufacturers to enter the market as well
According to survey data from social platforms and the Internet, some consumers have shown a preference for the remanufactured products of traditional automotive engine manufacturers, and some consumers are even loyal to a particular brand [1]
From the perspective of consumer utility, by constructing and solving utility functions for different types of consumers, this paper investigates the impact of the trade-in remanufacturing policy and consumer choice behavior on the Sustainability 2020, 12, x FOR PEER REVIEW

Summary

Introduction

The introduction of the trade-in remanufacturing policy for automotive engines has attracted traditional automotive engine manufacturers to expand their business into the remanufacturing market, but it has attracted many third-party automotive engine remanufacturers to enter the market as well. Shu et al [18] investigate the optimal pricing decision under the remanufacturing subsidy and find that the trade-in remanufacturing policy can encourage customers to replace their existing products. Some scholars have paid attention to a series of effects of the trade-in remanufacturing policy, few studies have discussed the impact of the trade-in remanufacturing policy on remanufacturing brand competition decisions. The impact of the trade-in remanufacturing policy on remanufacturing brand competition decisions about two different types of remanufacturers is rarely discussed. This paper discusses the impact of the trade-in remanufacturing policy on competition strategies of different automotive remanufacturing engine brands. From the perspective of consumer utility, by constructing and solving utility functions for different types of consumers, this paper investigates the impact of the trade-in remanufacturing policy and consumer choice behavior on the Sustainability 2020, 12, x FOR PEER REVIEW. The optimal demand for the third-party brand remanufactured engines can be expressed as q2∗

Analysis and Discussion

Conclusions