Suchergebnisse

Introducing proprietary parts to gain a competitive edge is a well-known, yet poorly understood strategy original equipment manufacturers (OEMs) adopt. In this paper, we consider an OEM which sells new products and competes with an independent remanufacturer (IR) selling remanufactured products. The OEM considers using proprietary parts to manage the secondary market for remanufactured products. Thereby, the OEM designs its product to balance the trade-off between the cost of proprietariness and the extra income from selling the proprietary parts to the IR. We observe that the OEM always chooses the smallest possible proportion of proprietary parts. This allows it to control the secondary market without the need to overly adjust the price charged for new products. Deterring market entry by the IR by pricing the proprietary parts prohibitively, an OEM strategy observed in several industries, is only optimal when the willingness-to-pay for remanufactured products is low. Otherwise, the OEM benefits more from sharing the secondary market profits with the IR through the use of proprietary parts. Finally, we find that the OEM can also use proprietary parts to strategically deter entry by the IR and discourage it from collecting the cores. This can support the OEM's decision to engage in remanufacturing even in the case of a collection cost disadvantage. We show that – counterintuitively – the OEM may take up remanufacturing in situations where the IR would not. While the introduction of proprietary parts is detrimental to both IRs and consumers, OEM remanufacturing softens this loss for the consumers.

We study the competition between two remanufacturers in the acquisition of used products and the sales of remanufactured products. One firm has a market advantage; we consider two separate cases where either firm could have an acquisition advantage. The problem is formulated as a simultaneous game on a market that is vertically differentiated in both acquisition and sales, where both firms decide on their respective acquisition prices for used products, and selling prices for remanufactured products. A key finding is that a market advantage is significantly more powerful than an acquisition advantage. The firm with a market advantage can preempt the entry of the other firm, even if that firm has a significant acquisition advantage, but not the other way around. This is accomplished through an aggressive acquisition strategy, where the firm with a market advantage sets significantly higher acquisition prices.