Abstract
We aim to study the incentive alignment issues of a brand-owner and a remanufacturer towards quality certification for refurbished products. We develop a game theoretic model where a remanufacturer (he) with a quality image disadvantage sells refurbished products and a brand-owner (she) wholesales regular products to her retailer. The customers have an uncertain quality image towards the refurbished products. It is optional for the remanufacturer to eliminate his quality image disadvantage by receiving a certification from the brand-owner. We find that the brand-owner and the remanufacturer reach incentive alignment when their competition is intense and the remanufacturer's quality image disadvantage is significant. Regarding the brand-owner, she has one more revenue source, and her profit margin is increased by offering quality certification for the remanufacturer. We further study the influence of quality uncertainty variance of the refurbished product on two firms' performances, and we find that the opportunity of their incentive alignment becomes constrained when the refurbished product demand is highly varying.
| Original language | English |
|---|---|
| Article number | 118314 |
| Number of pages | 17 |
| Journal | Journal of Cleaner Production |
| Volume | 242 |
| DOIs | |
| Publication status | Published - 1 Jan 2020 |
| Externally published | Yes |
Keywords
- Conflict management
- Demand uncertainty.
- Green supply chain
- Quality image
- Refurbished products
ASJC Scopus subject areas
- Renewable Energy, Sustainability and the Environment
- General Environmental Science
- Strategy and Management
- Industrial and Manufacturing Engineering
