The Study Of Firms’ Strategies Considering Quality Differences And Third-party Recycling

In spite of the rapid development of social economy,the attendant environmental issues are becoming increasingly serious.As the tools of developing the green economy,recycling and remanufacturing have been widely promoted by enterprises and governments,in an effort to achieve cost reduction and efficiency improvement.Take the public policies and the fierce market competition into consideration,enterprises actively explore new modes of recycling and remanufacturing to rationally utilize resources.From the realistic perspective,enterprises care about the issues whether they should choose a fairly new recycling mode to work more effectively and which mode to choose.In the meantime,governments are exploring the methods of providing support for enterprises.Focusing on the used products recycling,we discuss the enterprises’ recycling and remanufacturing strategies based on a solid realistic background.Enterprises who direct recycling adapt their strategies in response to emerging competition.They make a cross-brand repurchase to recycle used products effectively and sell more upgrade products.They offer discount for their competitors’ used products,so as to cannibalize the competitors’ market revenues and promote the value of competitive products.So,the detailed research question should be addressed that when it is benefit for a firm to choose cross-brand repurchase strategy.Moreover,with the rapid development of e-commerce,third-party retail platforms pay attention to reverse logistics and enter the recycling market one after another.Their bilateral property and low marginal costs have a great effect on the enterprises’ recycling and remanufacturing decisions.Hence,we explore the following question:How do the third-party retail platform and the firm determine their recycling and remanufacturing strategies with the entry of the platform?Enterprises will dispose of recycled used products after recycling in most cases,while government will subsidize environmentally friendly disposal methods which differ for product quality.The relevant questions,then,are how should a firm make recycling and remanufacturing decisions under the government subsidy policy and how should the government formulate subsidy policies.To answer the above questions,this paper is organized as follows:(1)We explore two competitive firms’ optimal recycling strategies with the effect of psychological factor when they choose cross-brand repurchase strategy and self-brand repurchase strategy,respectively.(2)We investigate the optimal recycling decisions of the firm and the platform,when the used products are recycled by the manufacturer and the third-party retail platform,respectively,and we obtain the firm’s channel choice.(3)When the used products differ in their quality,we focus on the optimal decisions of the manufacturer and the third-party recyclers under government subsidy policy.In addition,we analysis the impact of government policies on recycling and remanufacturing.We build theoretical models to explore the optimal recycling and remanufacturing decisions of the firm,the platform and the government.In addition,we prove the applicability and effectiveness of our results through numerical analyses.We provide several new insights and implications for the operation and management decisions of enterprises and governments.The main conclusions are as follows:(1)A firm can seize its competitors’ market potential by adopting cross-brand repurchase strategy.However,if there are partial consumers have no old products and considering the attribute of consumers’ decision-making preference for multiple choices(the attribute of multi-channel psychological acquisition),more repurchase channels will be generated for his competitors’ old products,which then reduces the market potential of the firm.To maximize its profit,only when the quantity of consumers who have no old products is low and consumers’ multi-channel psychological acquisition is high,will the firm adopt cross-brand repurchase strategy.With different combinations of these two important attributes,Cross-brand repurchase strategy are different in different markets.Moreover,by offering a higher discount,those emerging firms can get more market potential with lower profits.While,for these developing firms,they can balance the two targets by affecting the size of remaining markets with Ads.(2)If a third-party platform adopts the recycling strategy,its structure of income will change(i.e.,sales income and recycling income).When the cost index of recycling is low,the profit of the third-party platform will increase,even though the profit-sharing ratio between the manufacturer and the third-party platform is low.However,when the cost index of recycling is high,profit of the third-party platform will decrease.When the manufacturer is in the dominant position,he will use the recycling services from a third-party platform.Interestingly,when the recycling is done by a third-party platform,under certain situations,the recycling price paid by the third-party platform is less than the recycling price that he charges from the manufacturer.(3)Supervision of the government will increase the disposal cost of the manufacture,but the government subsidies will facilitate the recycling of manufacture.Those subsidized manufacturers prefer to refurbish those old products with high quality.When the subsidy is low,third-party recycling will capture more market potential with a high recycling price.Since the third-party platform recycling is out of the range of supervision,the platform will refurbish those old products with low quality which then hurt the sales market.With the increase of subsidy,the manufacturer will increase the recycling price till it exceeds that of the third-party platform.When the subsidy is too high,the third-party platform will not recycle which reduces the advantages of manufacturing and then hurt consumer surplus.When the subsidy is medium,with the increase of old products’ quality,the price of both manufacturer and third-party platform will increase.During that time,no one will be dominated by the other.Based on a solid realistic background,this paper studies the optimal decision of enterprises,platforms and governments in the context of recycling and remanufacturing by building a theoretical model and combining numerical analysis.And puts forward some management inspirations to provide theoretical guidance for the actual operation and management decisions of enterprises and governments.The main research conclusions are as follows:(1)Intuitively,companies can seize the market of competitor by implementing multi-buyback promotion.However,if there are consumers who occupying no old products in the market,and considering the attribute of consumers’ decision-making preference for multiple choices(the attribute of multi-channel psychological acquisition),it will provide more repurchase channels for the products of competitors to implement the the multi-buyback promotion.So it will be seized by competitors and make lower profits.Under the goal of profit maximization,the enterprise should implement the cross-brand repurchase strategy only when the proportion of consumers who do not have old products is small,and the multi-channel psychological acquisition attribute value of consumers is high.These two important factors also explain why different repurchase strategies exist in different types of markets.In addition,emerging companies can choose a higher discount and give up some profits to pursue higher market share;developing companies can influence the size of the blank market through advertising and other publicity methods to achieve a balance between the two goals.(2)When a third-party retail platform conducts recycling business,the revenue structure changes(sales revenue plus recycling revenue).When the recovery cost factor is low,the profit of the third-party retail platform always increases,even if the profit sharing ratio between the manufacturer and the third-party retail platform is low;however,when the recovery cost factor is pretty high,third-party retail platforms may start recycling business,which may reduce profits.The manufacturer has a completely dominant situation,at this time,he will definitely choose a third-party retail platform to help him recycle.Interestingly,when a third-party retail platform conducts recycling business,the recycling price paid by the third-party retail platform may be less than the recycling price that charges from the manufacturer.(3)Government regulation will increase the cost of disposing of used products for manufacturers,but government subsidies can help manufacturers to develop their recycling business to a certain extent.Subsidized manufacturers tend to recycle older products of higher quality for remanufacturing.When the level of government subsidies is low,third-party recyclers have more advantages in recycling.Due to lower costs,they can choose higher recycling prices and seize more recycling markets.And because third-party collectors won’t regulated by the government,they will choose old products of lower quality for remanufacturing,which will adversely affect the sales market.As the subsidy increases,the manufacturer’s recycling price and recycling volume increase until it exceeds that of third-party collectors.Interestingly,when the government subsidies is too high,it can reduce the advantages of manufacturers’ recycling,causing third-party collectors withdraw from the recycling market and reducing consumer surplus.When the government subsidy is at a moderate level,as the quality level of the old product increases,the prices of both manufacturers and third-party collectors will increase,and there will be a price crossover situation,that is,a situation where one party is not completely dominant.This study makes several major contributions to the field:We explore the optimal decisions of market players when the firms make a multi-buyback promotion and the third-party retail platform recycles,respectively,which contributes to two streams of literature on direct recycling and indirect recycling;We further discuss the impact of used products’ quality and government subsidy level on recycling and remanufacturing strategies,providing theoretical guidance for enterprises and platforms,and our results is of great realistic significance for the governments to promulgate subsidy policies.