Investigating remanufacturing competition with yield uncertainty on market share, profit, and consumer surplus

Abstract

Remanufacturing has been recognized both in literature and practice because of its greenness and cost saving. Since the reproduction processes could be affected by uncertain factors, remanufacturing is much more complex than producing new products. To investigate how yield uncertainty and market competition affect remanufacturing decisions, we compare the results under three classical market scenarios with random yield, that is, (a) Nash–Cournot, (b) monopoly, and (c) Stackelberg–Cournot. On comparing the expected remanufacturing scale, expected profit, and consumer surplus, it shows that as the number of remanufacturers increases, the planned collection quantity of a single remanufacturer decreases, while the total expected market output increases. Furthermore, we find that the largest expected profit and expected consumer surplus brought by market scenarios depend on a threshold remanufacturer number. We also relax the assumptions and extend our model to consider the scenario of m leaders and (Formula presented.) followers in a Stackelberg game. It is interesting to find that the first-mover advantage in profit and market share of the leader remanufacturer would be challenged when the number of leader remanufacturers is no less than 2. The results can be potentially useful for managerial decisions and environmental administrations.