Optimal entry strategy of a remanufacturer and its impact on carbon reductions with online consumer reviews

Abstract

ABSTRACT This study attempts to examine the effects of online consumer reviews on a remanufacturer’s entry strategy and carbon reductions. We consider a manufacturer selling a new product over two periods in online retailing, and a remanufacturer determines whether to enter the market in the first or second period to sell a remanufactured product. We find that online consumer reviews have significant impacts. First, the remanufacturer does not always choose the first-period entry strategy. Second, the remanufacturer’s earlier entry is not always detrimental to the manufacturer, but can effectively reduce carbon emissions. Third, both firms’ pricing decisions, total payoffs and carbon emission reductions are closely related to the initial consumer base in the first period, and both firms do not always benefit from online consumer reviews. Finally, online consumer reviews are beneficial to the environment when there are less primary consumers, and vice versa.