Recovering and remanufacturing to fulfill EPR regulation in the presence of secondary market

Abstract

To relieve competitive pressure from the secondary market and increase customer demand, producers may choose to recover and remanufacture used products. Extended Producer Responsibility (EPR) regulations have been formulated to alleviate the waste-disposal problem, which may also affect the development of remanufacturing industry. We investigate how EPR affects the remanufacturing decision and analyze related performance, including collection rate and producer profit. Our results demonstrate that EPR regulation is beneficial during the early development phase of remanufacturing industry and help improve the collection rate. However, our analyses also reveal that EPR may limit the producer's profits, and stringent collection targets inhibit the producer from remanufacturing. In addition, we find that high-durability used original/remanufactured products are not conducive for remanufacturing. The model is calibrated with field-collected heavy truck engine remanufacturing data. Three Model Extensions covering comprehensive regulation, duopoly competition, and recycling used original products supplement the findings.