Pricing Strategies of Dual-Recycling Channels considering Refurbishing and Remanufacturing of WEEE

Abstract

This article studies pricing strategies of the dual-channel recycling supply chain where the manufacturer and the recycler compete on price in recycling waste electrical and electronic equipment (WEEE) and cooperate in disposing of them. This article is based on whether the recycler can refurbish and distinguish two different treatment methods of WEEE: refurbishment by the recycler and remanufacturing by the manufacturer. Two dual-channel recycling structures are proposed: (1) the recycler cannot refurbish when the manufacturer remanufactures; (2) the recycler can refurbish when the manufacturer remanufactures. By solving two Stackelberg game models, we derive pricing strategies. The impacts of recycled products’ quality and base profit for remanufacturing and refurbishing on pricing strategies are discussed. We find that the recycler prefers refurbishing when its base profit for refurbishment is greater than the manufacturer’s base profit for remanufacturing, rather than the transfer price. Interestingly, the recycler’s refurbishment does not reduce the manufacturer’s profits but creates a win-win situation through their cooperation. Furthermore, the better quality of recycled products and the higher base profit for refurbishing and remanufacturing can bring more profit to the recycler and the manufacturer, increase the recycling prices, improve the efficiency of resource utilization, and reduce environmental pollution.

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