Competition in remanufacturing

Competition in remanufacturing

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Article ID: iaor20022740
Country: United States
Volume: 10
Issue: 2
Start Page Number: 125
End Page Number: 142
Publication Date: Jun 2001
Journal: Production and Operations Management
Authors: ,
Keywords: game theory
Abstract:

We present a two-period model of remanufacturing in the face of competition. In our model, an original equipment manufacturer (OEM) competes with a local remanufacturer (L) under many reverse logistics configurations for the returned items. After establishing the Nash Equilibrium in the second period sub-game, we use numerical experiments for comparative statics. OEM wants to increase L's remanufacturing cost. Surprisingly, while L competes in the sales market, she has incentives to reduce OEM's remanufacturing cost. A social planner who wants to increase remanufacturing can give incentives to the OEM to increase the fraction available for remanufacturing, or reduce his remanufacturing costs.

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