The incentives for remanufacturing based on product design and the effects of government intervention

XIAO Lu, WANG Xianjia, CHIN Kwaisang, QIN Yong

Systems Engineering - Theory & Practice ›› 2017, Vol. 37 ›› Issue (5) : 1229-1242.

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Systems Engineering - Theory & Practice ›› 2017, Vol. 37 ›› Issue (5) : 1229-1242. DOI: 10.12011/1000-6788(2017)05-1229-14

The incentives for remanufacturing based on product design and the effects of government intervention

  • XIAO Lu1,2, WANG Xianjia1, CHIN Kwaisang2, QIN Yong3
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Abstract

In this paper, we formulate a two-period model in which an OM decides the remanufacturability level of products in product design in the first period, and a remanufacturer enters the product market to compete with the OM in the second period. The OM can control the supply of used remanufacturable products by changing the remanufacturability level in product design. A product with higher remanufacturability will directly decrease the production cost of the remanufacturer, increase fixed costs and variable costs of new products for the OM, and lower the producing tax to the government. Making use of game theory, we derive the equilibrium decisons for the OM and remanufacturer in the two scenarios that the collection is unconstrained or constrained. We characterize the equilibrium decisions to describe how the OM and remanufacturer behave with respect to changes in government producing tax. We analyse the sensitivity of the equilibrium decisions, and consider the trends of the equilibrium production of remanufactured products, the equilibrium profits of remanufacturer and OM with regard to the percent changes in related parameters.

Key words

remanufacturing / game theory / product design / price competition / government intervention

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XIAO Lu , WANG Xianjia , CHIN Kwaisang , QIN Yong. The incentives for remanufacturing based on product design and the effects of government intervention. Systems Engineering - Theory & Practice, 2017, 37(5): 1229-1242 https://doi.org/10.12011/1000-6788(2017)05-1229-14

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Funding

National Natural Science Foundation of China (71231007, 71373222, 71501149)
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