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How Does Licensing Remanufacturing Affect the Supply Chain Considering Customer Environmental Awareness?

Author

Listed:
  • Zongbao Zou

    (Sun Yat-sen Business School, Sun Yat-sen University, Guangzhou 510275, China)

  • Fan Wang

    (Sun Yat-sen Business School, Sun Yat-sen University, Guangzhou 510275, China)

  • Xiaofan Lai

    (Sun Yat-sen Business School, Sun Yat-sen University, Guangzhou 510275, China)

  • Jingxian Hong

    (Sun Yat-sen Business School, Sun Yat-sen University, Guangzhou 510275, China)

Abstract

As sustainability issues are receiving increasing attention in society, in recent years many manufacturers have been adopting remanufacturing via technology licensing. This paper uses a game theory approach to investigate this strategy of a manufacturer under a closed-loop supply chain consisting of one supplier, one manufacturer, and one third-party remanufacturer (TPR), with the consideration of customer environmental awareness. In particular, the supplier supplies the components to the manufacturer and the manufacturer adopts technology licensing remanufacturing via the TPR. We explicitly characterize the reactions between the supplier and the manufacturer as being in equilibrium after adopting the technology licensing. We find that only when remanufacturing is a potential threat to the supplier is the performance of the supply chain improved and the double marginalization effect effectively eliminated. Moreover, remanufacturing by technology licensing only increases the profit of the manufacturer, but decreases the profit of the supplier. Interestingly, contrary to traditional wisdom, the existence of remanufactured products does not reduce the quantity of new products. Furthermore, remanufacturing by technology licensing may not always improve the environment, but customers in the market have environmental awareness that facilitates remanufacturing.

Suggested Citation

  • Zongbao Zou & Fan Wang & Xiaofan Lai & Jingxian Hong, 2019. "How Does Licensing Remanufacturing Affect the Supply Chain Considering Customer Environmental Awareness?," Sustainability, MDPI, vol. 11(7), pages 1-23, March.
  • Handle: RePEc:gam:jsusta:v:11:y:2019:i:7:p:1898-:d:218312
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    References listed on IDEAS

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    Cited by:

    1. Yan Zhou & Xue-Qi Liu & Kar-Hung Wong, 2021. "Remanufacturing Policies Options for a Closed-Loop Supply Chain Network," Sustainability, MDPI, vol. 13(12), pages 1-26, June.
    2. Ying Wu & Youwei Li, 2022. "Competition or Authorization—Manufacturers’ Choice of Remanufacturing Strategies," Sustainability, MDPI, vol. 14(19), pages 1-29, October.
    3. Ciwei Dong & Qingying Li & Bin Shen & Xun Tong, 2019. "Sustainability in Supply Chains with Behavioral Concerns," Sustainability, MDPI, vol. 11(15), pages 1-7, July.
    4. Zongbao Zou & Cong Wang & Qinjia Zhong, 2022. "How Does Retailer-Oriented Remanufacturing Affect the OEM’s Quality Choice?," Sustainability, MDPI, vol. 14(13), pages 1-21, June.
    5. Tianyi Guo & Chaonan Li & Yan Chen, 2022. "Remanufacturing Strategy under Cap-and-Trade Regulation in the Presence of Assimilation Effect," Sustainability, MDPI, vol. 14(5), pages 1-19, March.
    6. Wei He & Lan Liang & Kai Wang, 2020. "Economic and Environmental Implications of Quality Choice under Remanufacturing Outsourcing," Sustainability, MDPI, vol. 12(3), pages 1-18, January.

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