Publication:
Managing New and Remanufactured Products

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Authors
Ferrer, Geraldo
Swaminathan, Jayashankar M.
Subjects
remanufacturing
duopoly
self-selection
product-line pricing
Advisors
Date of Issue
2006-01
Date
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Language
Abstract
We study a firm that makes new products in the first period and uses returned cores to offer remanufactured products, along with new products, in future periods. We introduce the monopoly environment in two-period and multiperiod scenarios to identify thresholds in remanufacturing operations. Next, we focus our attention on the duopoly environment where an independent operator (10) may intercept cores of products made by the original equipment manufacturer (OEM) to sell remanufactured products in future periods. We characterize the production quantities associated with self-selection and explore the effect of various parameters in the Nash equilibrium. Among other results, we find that if remanufacturing is very profitable, the original-equipment manufacturer may forgo some of the first-period margin by lowering the price and selling additional units to increase the number of cores available for remanufacturing in future periods. Further, as the threat of competition increases, the OEM is more likely to completely utilize all available cores, offering the remanufactured products at a lower price.
Type
Article
Description
The article of record as published may be located at http://dx.doi.org/10.1287/mnsc.1050.0465
Series/Report No
Department
Graduate School of Business & Public Policy (GSBPP)
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Format
Citation
Management Science, Vol. 52, No. 1, January 2006, pp. 15-26
Distribution Statement
Rights
This publication is a work of the U.S. Government as defined in Title 17, United States Code, Section 101. Copyright protection is not available for this work in the United States.
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