Economic, Environmental, and Social Impact of Remanufacturing in a Competitive Setting

This paper studies the environmental and social trade-offs of remanufacturing for product+service firms under competition. We use an analytical model and a behavioral study that together incorporate demand cannibalization from multiple customer segments across the competing firms' product lines...

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Bibliographic Details
Published in:IEEE transactions on engineering management 2017-11, Vol.64 (4), p.476-490
Main Authors: Raz, Gal, Ovchinnikov, Anton, Blass, Vered
Format: Article
Language:English
Subjects:
Analytical models
Competition
Demand cannibalization
Economics
Environmental factors
Environmental impact
externalities
Impact analysis
Mathematical models
Product life cycle management
product+service firms
product-line competition
Remanufacturing
social value
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Summary:This paper studies the environmental and social trade-offs of remanufacturing for product+service firms under competition. We use an analytical model and a behavioral study that together incorporate demand cannibalization from multiple customer segments across the competing firms' product lines. We measure firms' profits, consumer surpluses, environmental impacts, and environmental costs along the products lifecycles in the resultant equilibria with and without remanufacturing. We show that competition intensifies the tension between increased profit and worsened environmental impact from market expansions caused by remanufacturing identified by prior research in the case of monopoly. However, bringing in the social dimension leads to an overall positive assessment: remanufacturing creates additional consumer surplus, which compensates for the cost of the environmental impact. In other words, we found strong support that remanufacturing is beneficial for the society.
ISSN:0018-9391
1558-0040
DOI:10.1109/TEM.2017.2714698