"Trade In Old For Remanufacturing" Strategy Under Different Market Structure

With the increasingly severe environmental pollution and resourse consumption, the problem of recovery and reuse of waste products has been highly emphasized by many countries and enterprises. Recently, the increasing number of legislations in many countries such as America, Japan, and Germany have forced enterprises’ recycling behaviours. Early in the last century, some large enterprises like Ford, Xerox and Hewlett-Packard have already implemented their journey of product recycling and remanufacturing, which not only improves resource utilization, but also brings enterprises great economic benefits.Currently, with mature theories and models, remanufacturing closed-loop supply chain has been widely studied by scholars at home and abroad. However, trade-in old for remanufacturing closed-loop supply chain is still a blind spot. Due to the needs of new products and remanufactured products’ pricing, trade-in old remanufacturing closed-loop supply chain is facing a more complicated operating environment, which gives a huge challenge to enterprises’ efficient operation and management. In this paper, the decisions of trade-in old for remanufacturing strategy in two different environments were studied based on game theory.The main contents are as follows:1. The decisions of trade-in old for remanufacturing strategy with the monopoly enterprise were studied. Firstly, we developed analytical models of a monopoly enterprise based on whether the enterprise implemented trade-in old for remanufacturing strategy or not. Then, we compared the results and found out how trade-in old for remanufacturing strategy influenced theproduction decisions. Finally, the conclusions were verified by numerical simulations. We found that trade-in old for remanufacturing contributed the increase of the enterprises’ total profit and environmental benefits as well as the decrease of the profit of new products.The enterprise was more willing to implement trade-in old for remanufacturing strategy because of the low cost of remanufacturing and the high consumer receptivity to the remanufacturing product. On the contrary, if the prices of used products in the second-hand market were high, it was difficult for the enterprise to implement trade-in old for remanufacturing.2. We studied the low-end enterprise decisions of trade-in old for remanufacturing strategy. Firstly, we discussed the optimal production decisions of low-end enterprise without trade-in old for remanufacturing strategy, when a high-end enterprise implemented TOR strategies earlier. Secondly, considering trade-in old for remanufacturing strategy, we further explored the low-end enterprise’s decisions. Finally, we discussed the low-end enterprise’s choice about trade-in old for remanufacturing strategy. The results indicated that the higher consumer receptivity of the remanufacturing products was, the more beneficial to low-end enterprises that implemented trade-in old for remanufacturing, because it not only improved profits of low-end enterprises, but also expanded their market share. The implementation of trade-in old for remanufacturing in the low-end enterprise lowered the prices of the products and increased the consumers’benefit, while decreased the profit of the high-end enterprises.3. The decisions of trade-in old for remanufacturing strategy in the high-end enterprise were studied. Firstly, we developed analytical models of a profit-maximizing high-end enterprise based on whether the enterprise implemented trade-in old for remanufacturing strategy or not, when the low-end enterprise has implemented TOR strategy ahead of high-end enterprise. Secondly, we also compared these two models and further illustrated the decisions of the high-end enterprise. The results indicated that it was beneficial for high-end enterprise not to implement the trade-in old for remanufacturing strategy. The high-end enterprise with TOR strategy not only decreased the retail price and the quantity of new production, but also reduced his own and low-end enterprise’s profit. When the high-end enterprise implemented trade-in old for remanufacturing, consumers were more profitable.