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Journal of Business Economics

, Volume 84, Issue 5, pp 715–747 | Cite as

Buying used products for remanufacturing: negotiating or posted pricing

  • Jochen GönschEmail author
Original Paper

Abstract

Product reclamation is a critical process in remanufacturing. It is generally assumed in the literature that customers simply want to get rid of their used products without expecting any compensation for them. Some authors have only recently started looking into firms that offer a posted (fixed) price for them. Following recent reports suggesting that customers are increasingly open to bargaining, we compare using a posted price and bargaining to obtain used products. In our analysis, we consider an original manufacturer acting as a monopolist as well as a manufacturer and an independent remanufacturer acting in a duopoly. We analytically show that bargaining is always beneficial to the monopoly manufacturer. In the duopoly case, we distinguish a Cournot competition and a market with the manufacturer as Stackelberg leader. The results of a numerical study show that both firms will use posted pricing in the Cournot competition, especially if bargaining is not costless. By contrast, the remanufacturer can significantly increase his profit by using negotiations if he is the Stackelberg follower.

Keywords

Remanufacturing Closed-loop supply chains Bargaining 

JEL Classification

M19 Q3 

Notes

Acknowledgments

We thank Jonathan Manz for the implementation of the numerical experiments, his ideas, and many fruitful discussions. We are also grateful to three anonymous referees for their valuable comments, which helped to greatly improve the presentation of the article.

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Copyright information

© Springer-Verlag Berlin Heidelberg 2014

Authors and Affiliations

  1. 1.Department of Analytics and OptimizationUniversität AugsburgAugsburgGermany

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