Abstract
Trade-in strategy is a common mode of promotion for firms taking part in the circular economy because it encourages consumers to buy remanufactured products, via a “trade-old-for-remanufactured” framework. This paper studies trade-in strategy by developing game models for a closed-loop supply chain with one manufacturer and two independent remanufacturers. The former is responsible for producing and selling new products and the latter two compete with each other for the collection of used products and the sales of remanufactured products. Unlike the extant literature, this paper focuses on the competition between two independent remanufacturers (IRs) and studies on how holder segment (whether or not to own used products) and competition affects the trade-in strategy. It finds that the proportion of holders on the remanufactured product prices of the IR1 and IR2 have a negative correlation. Conversely, the impact of the proportion of holders on the IR1’s and IR2’s demands (and on their profits) is the opposite. The trade-in strategy generates more benefits for the IR1 only when the proportion of holders is sufficiently high. In addition, when consumers experience a greater difference in durability between remanufactured products and original new products, trade-in strategy is more welcomed by consumers, which in turn, generates more benefits for the IR1.
Highlights
With the development of remanufacturing technology, many manufacturers have started recycling and remanufacturing waste products, including end-of-life home appliances and used electronic products
When consumers experience a greater difference in durability between remanufactured products and original new products, trade-in strategy is more welcomed by consumers, which in turn, generates more benefits for the IR1
Our study investigates the trade-in strategy between two independent remanufacturers (IRs) and examines how this strategy is impacted by the holder segment and the competition between the IRs
Summary
With the development of remanufacturing technology, many manufacturers have started recycling and remanufacturing waste products, including end-of-life home appliances and used electronic products. In order to encourage consumer uptake of remanufactured products, and to increase the collection of used products, many manufacturers adopt trade-in strategies, including “trade-old-for-new” or “trade-old-for-remanufactured” deals [7,8,9]. Our paper investigates the selection mechanisms involved in a “trade-oldfor-remanufactured” strategy as it can further promote resource conservation in both the collection of used products and the sales of remanufactured products. To the best of our knowledge, this study is one of only a few that consider the holder segment and competition in relation to optimizing sustainable trade-in operations To achieve this objective, we develop a CLSC with one manufacturer and two IRs, wherein the IR1 provides a strategy of trading used products for remanufactured products and the IR2 does not, in the context of both competing with each other on the sale of remanufactured products.
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