The Product Design Strategy Of The Manufacturer Under Patent Protection

With the depletion of natural resources, the high frequency of environmental pollution, the improvement of customers’ environmental awareness and the integrity of environmental laws and rules, recycling and remanufacturing of waste products makes great significance, which receives increasing attention from the business and academic circles. Based on the extended producer responsibility system, the original manufacturer chooses to remanufacture itself or entrusts the third party to remanufact-ure. Current research about remanufacturing mostly focuses on reverse logistics network design, channel selection, remanufacturing competition and product pricing, while the research on product design is quite few, and existing research on product design often focuses on the choice of a particular attribute of the product, such as quality, greenness, remanufacturability, durability, and so on, the influence factors of product design is not analyzed in depth. In addtion, when the third party remanufactures, an unsolved problem yet worthy of discussion is how product design and patent license affect each other. Because of this, based on the research literature and the analysis of relevant theory, this paper studies the product design decisions of the manufacturer when the manufacturer or the third party remanufacturers respectively.When the manufacturer remanufactures, the manufacturer produces both new and remanufacturing products. Under the premise that consumer preference is different and remanufacturing has cost advantage, this paper studies the optimal production strategy and product design strategy of the manufacturer by constructing a constrained extreme-value problem. The result shows that the manufacturer’s optimal production strategy and product design strategy relies on three factors:consumer preference, cost of product design and product design effect. When remanufacturing does not have cost advantage, remanufacturing makes no benefit to the manufacturer, thus the manufacturer will produce new product only.When the third party remanufactures, the manufacturer produces new product only, the recycling and remanufacturing of waste products is done by the third party. In order to avoid that remanufacturing product cannibalizes new product sales, the manufacturer develops a relicensing fee mechanism which limits the third party’s remanufacturing behavior. Under the premise that consumer preference is different and remanufacturing has cost advantage, this paper studies the optimal production strategy and product design strategy of the manufacturer and the optimal production strategy of the remanufacturer by constructing a game model. The result shows that the optimal strategies of the manufacturer and remanufacturer depends on three factors as above as well, while the relevant threshold value has changed. In the two different mechanisms——product design and patent fee, product design finally wins out and contributes to the third party’s remanufacturing activities to a certain extent. In contrast to the manufacturer remanufacturing mode, when the third party remanufa-ctures, new product production increases, remanufacturing product production and product design level decrease.