Is Remanufacturing Subsidy Effective All the Time? Investigation of Market Segmentation with Replacement Consumers

This research is inspired by a government program intended to promote remanufacturing consumption through trade-ins. Be different from former subsidy programs which are provided for remanufacturing consumption, this program is provided solely for buy remanufactured products through trade-ins. To inv...

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Bibliographic Details
Published inIAENG international journal of applied mathematics Vol. 52; no. 1; pp. 1 - 13
Main Authors Wang, Miao-Miao, Wu, Jun, Chen, Xin-Yu, Tian, Tao, Zhu, Xiao-Xi
Format Journal Article
LanguageEnglish
Published Hong Kong International Association of Engineers 01.03.2022
Subjects
Consumers
Consumption
Government subsidies
Investigations
Production costs
Remanufacturing
Segmentation
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Summary:This research is inspired by a government program intended to promote remanufacturing consumption through trade-ins. Be different from former subsidy programs which are provided for remanufacturing consumption, this program is provided solely for buy remanufactured products through trade-ins. To investigate the effect of government subsidy, we established profit maximizing models by considering primary and replacement consumers' segmented purchasing behaviors for the new and remanufactured products. Analysis shows that the government subsidy program will do damage to the consumption of remanufactured products on the primary market although it has been proved to be effective in promoting remanufacturing consumption on the replacement segment. Results show that whether the manufacturer's profit is positively influenced by the fiscal program depends on the production cost of remanufactured products, and the manufacturer's profit will always increase with government subsidy when the remanufacturing cost is low enough. In addition, when the price of the remanufactured product is not high, the market size of primary consumers plays a positive role in promoting the consumption of remanufactured products through trade-ins. Results also suggest that, to make more profit on the selling side, the manufacturer does not always benefit directly from collecting the used product. We also investigate how the manufacturer makes his strategic selection on pricing strategy with key parameters.
ISSN:1992-9978
1992-9986