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Competitive strategy in remanufacturing and the effects of government subsidy

  • Lu Xiao
  • Xianjia Wang
  • Kwai-Sang Chin
  • Yong Qin
Article

Abstract

In this paper, we consider a single-period model comprised of an original manufacturer (OM) who produces only new products and a remanufacturer who collects used products from consumers and produces remanufactured products. The OM and the remanufacturer compete in the product market. We examine the effects of government subsidy as a means to promote remanufacturing activity. In particularly, we consider three subsidy options: subsidy to remanufacturer, subsidy to consumers, and subsidy shared by remanufacturer and consumers. We find that the introduction of government subsidy on remanufacturer or consumers always increases remanufacturing activity. We also find that subsidy to remanufacturer is the best subsidy option, because subsidy to remanufacturer results in lower price of remanufactured products, thus leading to higher consumer surplus.

Keywords

Remanufacturing competitive strategy government subsidy game theory 

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Notes

Acknowledgments

The authors thank the anonymous referees for their comments and suggestions. This research was supported by the Natural Science Foundation of China (Nos.71231007, 71373222, 71501149).

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Copyright information

© Systems Engineering Society of China and Springer-Verlag Berlin Heidelberg 2017

Authors and Affiliations

  • Lu Xiao
    • 1
    • 2
  • Xianjia Wang
    • 1
  • Kwai-Sang Chin
    • 2
  • Yong Qin
    • 3
  1. 1.School of Economics and ManagementWuhan UniversityWuhanChina
  2. 2.Department of Systems Engineering and Engineering ManagementCity University of Hong KongHong KongChina
  3. 3.Xiangyang Sergeant School of Military Economy AcademyXiangyangChina

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