Abstract
With the rising awareness of environmental responsibility in industrial production, a series of recovery strategies have been developed and play different roles in achieving sustainability. In this study, we examine when quality recovery, low-end recovery, and hybrid recovery result in a win-win outcome where both profitability and environmental performance can be improved for a durable product manufacturer. We develop a game-theoretic model to analyze the manufacturer’s payoffs under different recovery strategies. A secondary market where used products can be resold among consumers is also considered. We obtain the results by comparing the profitability and environmental impact under each recovery strategy. Hybrid recovery causes both synergy and a contradiction effect between quality and low-end recovery. It always improves the win-win outcome of low-end recovery and it can also improve the win-win outcome of quality recovery under a high recovery standard when the recovered value is not too high. The technology improvement only achieves environmental sustainability under sufficient stringent recovery standard, otherwise, it may backfire and deteriorate the environment. We offer insights for the policymaker to understand the role of the recovery standard in achieving the win-win outcome and the importance of setting a proper recovery standard in achieving environmental sustainability.
Highlights
The growth of industrial production and over-consumption caused by humans is intensifying the resource shortage and environmental burden of waste
We focus on comparing quality recovery, low-end recovery, and hybrid recovery strategies, which are different in the source of recovery materials and the quality of recovered product
We study whether quality recovery, low-end recovery, or hybrid recovery can be a win-win strategy, both profitably and environmentally and whether these strategies are suitable for the sustainable development of recovery technology
Summary
The growth of industrial production and over-consumption caused by humans is intensifying the resource shortage and environmental burden of waste. While under low-end recovery manufacturers prolong the service life of used products as low-end substitutes after being repaired, refurbished, or remanufactured [6] This strategy is typically adopted by Patagonia, an outdoor apparel firm who encouraged consumers to repair their products instead of discarding them by offering free repairs [7]. The remanufactured product competes with the used product in the secondary market, which impairs the profitability of low-end recovery As this phenomenon is getting more common today, the choice of the optimal recovery strategy is becoming more unclear. We consider that the manufacturer can adopt quality recovery, low-end recovery, or both to optimize his profit considering a secondary market, which allows consumers to resell used products. We discuss the proper recovery standard under which the manufacturer can achieve a win-win outcome and sustainable environmental improvement by enhancing recovery technology.
Sign-in/Register to view highlights & summary Sign-in/Register to access full text options 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
