Outsourcing remanufacturing and collecting strategies analysis with information asymmetry

Abstract

Outsourcing remanufacturing as a strategy for original equipment manufacturers (OEMs) to implement extended producer responsibility policy has become an important research problem. Considering information asymmetry caused by a third-party remanufacturer (3PR) misreporting remanufacturing production cost, this paper examines outsourcing collecting strategy through evolutionary game approach, and further obtains the long-term outsourcing remanufacturing strategy. The remanufacturing modes explored include in-house (OEM) and outsourcing (3PR) remanufacturing. The collecting modes explored include in-house (OEM), outsourcing (3PR) and secondary outsourcing (third-party collector, 3PC) collecting. Moreover, this paper provides optimal decision-making based on misreporting and further discusses the impact of information asymmetry on outsourcing strategy. Meanwhile, this paper proposes a series of insights of long-term strategy by integrating the dimensions of economy, society and environment. Finally, an information sharing strategy to deal with 3PR misreporting is further analyzed. The major conclusions indicate that under outsourcing remanufacturing with OEM collecting, the 3PR prefers to misreport the remanufacturing production cost information downward, which will lead to a result that information asymmetry is beneficial to both OEM and 3PR. However, misreporting in other collecting modes is only beneficial for 3PR. The evolutionary stability strategy of collecting depends on the difficulty of collecting and whether the information is symmetrical, which also affects outsourcing remanufacturing strategy. Under a certain condition, Pareto improvement in economic, social and environmental dimensions can be achieved by the information sharing strategy.