Pricing Strategies Of Trade Old For New Or Trade Old For Remanufactured Products Under Deposit Mechanism

Reprocessing plays an important role in recycling resources,reducing environmental pollution and increasing business benefits.As an essential part of waste reprocessing in a closed-loop supply chain,recycling has supported by government,enterprises and consumers.However,trade-in strategy plays an important role in motivating the repurchasing by consumers,as well as ensuring the quantity and quality of recycling.Inspired by Caterpillar who success in recycling old products for remanufacturing by implementing deposit.Assume that the new customers need afford a deposit when they buy new products,and the old customers can get a discount when they trade old for new products.This paper studies the optimal trade-in strategy when monopoly producer implement the deposit,and the optimal pricing strategy when the producer remanufactured by the old products.First,assuming that the product is in mature stage,the monopoly producer faces two types of customers at the same time,new customers need afford a deposit when they buy new products,and the old customers can get a discount when they trade old for new products.According to the pricing strategies of new products and discount amounts of trade old for new products,the new customers decide whether to buy new products and the old customers decide whether to trade old for new products.It obtains product demand functions under the cases of deposit and non-deposit correspondingly.To maximize the manufacturer's profit,it decides the optimal pricing of new products under these two cases.The results show that deposit and deposit discount factors can promote old consumers participate in trade-in and enable producers to obtain more profits under certain conditions.Second,according to the above,assuming that the monopoly producer faces two types of product markets and two types of customers at the same time,new customers need afford a deposit when they buy new or remanufactured products,and the old customers can get a discount when they trade old for new or trade old for remanufactured products.According to the pricing strategies of new or remanufactured products and discount amounts of trade old for new or trade old for remanufactured products,the new customers decide whether to buy remanufactured products and the old customers decide whether to trade old for remanufactured products.It obtains product demand functions under four cases correspondingly.To maximize the manufacturer's profit,it decides the optimal pricing of new and remanufactured products under these four cases.The results show that when new products and remanufactured products exist at the same time,the implementation of the deposit system can,under certain conditions,promote old customers to trade old for new ones and make producers more profitable.However,when the price of remanufactured product is lower and the discount is higher,it can promote the demand of remanufactured products,but the cannibalization between new and remanufactured products makes manufacturer less profitable.