Abstract
This paper examines the impact of take-back laws within a manufacturer/remanufacturer competitive framework. Take-back laws require that firms take responsibility for the collection/disposal costs of their products. We consider two alternative implementations of take-back laws that are distinguished by the degree of control that the manufacturer has on returns sold to the remanufacturer. In one implementation, known as collective WEEE take-back, the manufacturer has no control over returns sold to the remanufacturer. The other implementation, known as individual WEEE take-back, gives complete control to the manufacturer. We develop a general two-period model to investigate questions of interest to policy-makers in government and managers in industry. Our results suggest that, in some settings, enactment of collective WEEE take-back will result in higher manufacturer and remanufacturer profits while simultaneously spurring remanufacturing activity and reducing the tax burden on society. A negative effect is higher consumer prices in the market. In other settings, we find that collective WEEE take-back introduces a structural change to the industry-creating an environment where remanufacturing becomes profitable when it is not profitable without a take-back law. With respect to individual WEEE take-back, we find that the manufacturer often benefits from allowing the remanufacturer to enter the market, though from a government policy-maker perspective, there are clear risks of monopolistic behavior.
Original language | English (US) |
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Pages (from-to) | 1123-1140 |
Number of pages | 18 |
Journal | Journal of Operations Management |
Volume | 25 |
Issue number | 6 |
DOIs | |
State | Published - Nov 1 2007 |
Externally published | Yes |
Keywords
- Closed loop supply chains
- Competitive strategy
- Environmental laws
- Pricing
- Remanufacturing
- Reverse logistics
ASJC Scopus subject areas
- Strategy and Management
- Management Science and Operations Research
- Industrial and Manufacturing Engineering