Essays on modeling product returns and durable goods secondary markets

The main objective of this research is to enhance our understanding of the relationship between upstream product flow and downstream product flow. This objective is accomplished through the development and analysis of game-theoretic models of two reasons for upstream product flow: retailer buyback of used durable goods and consumer returns of unwanted purchases.; Research streams from marketing and operations management are merged in the development of an analytical model that describes how consumer purchase and return decisions are affected by a firm's pricing and restocking fee decisions. The optimal return policy for the firm is derived as a function of consumer preferences, the level of variety offered by the firm, and the forward and reverse channel capability of the firm. This generates testable hypotheses about how consumer-level and firm-level parameters affect the return policies observed in the marketplace. The findings suggest that the restocking fee reflects not only the firm's forward and reverse channel capabilities, but also the firm's breadth of assortment and the consumers' strength of preferences. The value to the firm of investing in marketing efforts to inform consumers of the best purchase decision in order to eliminate returns is identified. The marginal value of information is decreasing in the firm's operational efficiency, but increasing in the variety of products offered. It is found that informing consumers about the best purchase decision, even at no cost, is not always optimal for the firm.; Another model incorporates key characteristics of markets in which the retailer operates a used-good market, giving an explanation for the optimal contract form seen in the marketplace but not predicted by prior research. Conditions are found under which the manufacturer would choose to sell no new goods in the second period, ceding the market to the used-goods retailer. Surprisingly, the retailer-operated used-good market may improve manufacturer profits. Used goods expand the market rather than diminish sales of new goods. Survey and retailer sales data are used to support this finding.; The research advances the marketing literature through its theoretical contributions in the areas of durable goods, channel coordination and returns management.