Title

Essays on competitive strategy in remanufacturing

Date of Award

1-2006

Degree Type

Dissertation

Degree Name

Doctor of Philosophy (PhD)

Department

Management

Advisor(s)

Scott Webster

Keywords

Competitive strategy, Remanufacturing, Take-back law, Reverse logistics

Subject Categories

Business Administration, Management, and Operations

Abstract

This thesis analyzes competitive behavior in remanufacturing, examining two competitive frameworks in two different essays. The first essay examines the issue of take-back laws within a manufacturer/remanufacturer competitive framework, assessing the impact of alternative implementations of take-back laws. In the second essay, we examine the competitive framework with no take-back law, with the remanufacturer proactively collecting returns from the end-consumer market. For both essays, we develop a general two-period model to investigate a range of questions that may be of interest to policy-makers in government and managers in industry. Of primary interest to policy-makers are volume measures, such as total material that ends up in a landfill and percentage of total volume that is remanufactured; managers in industry are most interested in profitability measures. Hence, we conduct a numerical study to analyze the effect of take-back laws on profitability and volume.

In the first essay, we find evidence that sometimes industry is better off with take-back laws than without, and that in some settings, a manufacturer with control over returns can be good for industry profits and for the environment. In other settings, manufacturer control should be limited by government. In the second essay, we observe that excess returns are a concern for a low valuation type remanufacturer. In both essays, we also observe that the manufacturer benefits more (in terms of profitability) from a low valuation attached to the remanufactuable product rather than from a high cost structure of the remanufacturer, whereas the remanufacturer benefits more from a high valuation attached to remanufacturable product than from a low cost structure.

In both essays we find that a conflict of interest may exist between the manufacturer, remanufacturer and policy maker. The policy maker and remanufacturer usually prefer higher return rates, whereas the manufacturer prefers low return rates. Also, when the remanufacturer valuation is high, the policy maker prefers the manufacturer-preferred strategy. However, when the valuation is low, the policy maker prefers the remanufacturer-preferred strategy. Hence it is important for industry, government and academics to build effective mechanisms to bridge this gap.

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