Journal
EUROPEAN JOURNAL OF OPERATIONAL RESEARCH
Volume 284, Issue 2, Pages 572-587Publisher
ELSEVIER
DOI: 10.1016/j.ejor.2020.01.012
Keywords
Supply chain management; Closed-loop supply chains; Remanufacturing; Used product acquisition; Price competition
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We study the competition between two remanufacturers in the acquisition of used products and the sales of remanufactured products. One firm has a market advantage; we consider two separate cases where either firm could have an acquisition advantage. The problem is formulated as a simultaneous game on a market that is vertically differentiated in both acquisition and sales, where both firms decide on their respective acquisition prices for used products, and selling prices for remanufactured products. A key finding is that a market advantage is significantly more powerful than an acquisition advantage. The firm with a market advantage can preempt the entry of the other firm, even if that firm has a significant acquisition advantage, but not the other way around. This is accomplished through an aggressive acquisition strategy, where the firm with a market advantage sets significantly higher acquisition prices. (C) 2020 Elsevier B.V. All rights reserved.
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