The research of market structures for remanufactured products

Abstract

The rapid development of technology has made it easier to distribute products directly, and many enterprises excel at executing a multi-channel strategy to distribute products. The introduction of direct channel adds a new competition dimension to the enterprises. This paper considers three market channel structures: R-Channel, D-Channel and H-Channel. In R-Channel, both new products and remanufactured products are sold through a retailer. In D-Channel, new products are sold through retailers and remanufactured products are sold directly to consumers. In H-Channel, new products are sold through retailers, while remanufactured products through dual channel. Using the game theory, we obtain and analyse the equilibrium prices, market demands and the profits gain under these three settings. At the same time, the influence of consumers’ willingness to pay on the environment performance is researched. Our results show that the manufacturer prefers H-Channel. By introducing the direct channel the manufacturer is always economically better off, but it is not for the retailer. The numerical simulation also confirms the theoretical analysis and shows that H-Channel has advantages of economic benefit and environmental performance. It is feasible for practical application.