Product design and pricing strategies in a closed-loop supply chain with patent protection
ISSN: 0368-492X
Article publication date: 16 September 2021
Issue publication date: 30 November 2022
Abstract
Purpose
This paper aims to propose a two-period model in which an original equipment manufacturer (OEM) decides the remanufacturability level of products in product design and unit patent licensing fee at the first period, and a third-party remanufacturer (3PR) that has been licensed by the OEM enters the remanufacturing market to compete with the OEM at the second period.
Design/methodology/approach
This paper analyzes the OEM's optimal decisions of remanufacturability level in the product design and unit patent licensing fee at the first period, as well as the OEM's and the 3PR's optimal decisions of selling prices at the second period, under two scenarios that the remanufacturing is constrained or unconstrained by the collected quantity available at the end of the first period, by making use of game theory.
Findings
The study finds that the OEM will choose high remanufacturability in product design only when the unit cost saving of remanufacturing or unit production cost of new products exceed certain thresholds.
Originality/value
The study is the first attempt to simultaneously integrate product design and patent licensing in remanufacturing. It provides useful insights for OEM managers who face competition from 3PRs and may use their product design strategies to deter 3PRs and may protect patent of products by levying patent licensing fees from 3PRs.
Keywords
Acknowledgements
This research was supported by National Natural Science Foundation of China (Nos. 71902041, 71801175, 72171182, 71871171, 71971182) and Guangdong Basic and Applied Basic Research Foundation (No. 2020A1515011511).
Citation
Xiao, L., Wu, Z.-Y., Zhang, S.-L., Chen, Z.-S. and Govindan, K. (2022), "Product design and pricing strategies in a closed-loop supply chain with patent protection", Kybernetes, Vol. 51 No. 12, pp. 3656-3680. https://doi.org/10.1108/K-02-2021-0119
Publisher
:Emerald Publishing Limited
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