Remanufacturer–Manufacturer Collaboration in a Supply Chain: The Manufacturer Plays the Leader Role

Abstract

This paper adds to the growing remanufacturing literature by investigating a collaborative model in which the manufacturer serves as the remanufacturer's distributor while selling its own product. The paper extends the collaborative model that we have studied previously by characterizing it as a channel power structure under which the manufacturer plays the leader role in the collaboration. Furthermore, the paper compares this collaborative model with a competitive model in which the manufacturer competes with the remanufacturer in the market on pricing, sales volume and profit and finds that even if the manufacturer chooses to collaborate with the remanufacturer, it does not give up its market position; the manufacturer keeps the price of its product unchanged as the remanufactured product becomes increasingly acceptable to the consumer, and its product's sales volume remains unchanged in both models. Finally, this paper observes that the collaborative model benefits the manufacturer more than the competitive model, whereas the competitive model benefits the remanufacturer more than the collaborative model. Obviously, if collaboration benefits both of the manufacturer and remanufacturer, they will choose to collaborate, and the manufacturer will transfer part of its profit to the remanufacturer, but if competition brings them more profit, they will choose to compete in the market, and the remanufacturer will transfer part of its profit to the manufacturer.