Competitive Strategies Between Original Manufacturers And Remanufacturers Considering Strategic Consumers

With the rapid development of the economy and the improvement of social productivity,the waste of resources caused by human production and life not only has a bad impact on the ecological environment,but also has become a major obstacle to sustainable economic development.In response to the serious waste of resources,countries around the world have formulated legislation and policies to reduce waste through reuse,recycling and product recovery.Remanufacturing is an advanced form of product recycling,which not only increases the service life of products,but also achieves the purpose of reducing environmental pollution and achieving sustainable economic development.In China,the remanufacturing industry is an emerging industry,and due to the substitutability of remanufactured products for new products,the original manufacturers will instinctively prevent third-party remanufacturers from entering the market,which also makes the development of China’s remanufacturing industry difficult.However,with the development of informatization of the times,consumers have more and more extensive channels to obtain information,and the content of obtaining product information is more and more comprehensive.Consumers will strategically choose the timing of purchase and product type after considering their own utility.Remanufacturers are also looking forward to the emergence of more strategic consumers.Based on the above background,this paper uses a two-period Stackelberg game model involving with the original manufacturer as the leader and the remanufacturer as the follower to study the pricing decisions of the two companies in the face of strategic consumers.The manufacturer decides on two periods of their pricing strategies,and the remanufacturer makes a decision whether to enter the market after the first phase,and if it chooses to enter it will also decide on a pricing strategy.We use backward-induction to obtain the optimal pricing and corresponding profits for the original manufacturer and the remanufacturer in equilibrium.First,we study the effects of marginal cost of production per unit of quality,consumer discount on remanufacturing valuation,remanufactured product cost discount,and consumer patience on the optimal pricing strategy and profits of two companies,considering the presence of strategic consumers.Secondly,the impact of strategic consumers on remanufacturers’ profits is studied.Finally,we verify the robustness of our conclusions by introducing loyal customers and government subsidies to expand the model,and study their respective impact on the optimal prices and profits of original manufacturers and remanufacturers.Through theoretical research and numerical analysis,we have reached the following conclusions:(1)The remanufacturer may also enter the market at a profit when the marginal cost of production per unit of quality is too high,consumers are more impatient,and consumers value remanufactured goods at a low price.(2)The original manufacturer’s profits may also increase when consumers are more patient,the marginal cost of production per unit of quality is too high,and the cost discount of remanufactured products is higher.(3)Remanufacturers will also be worse off with more strategic consumers.