Competitive strategy in remanufacturing and the impact of take-back laws

Scott Webster, Supriya Mitra

Research output: Contribution to journalArticlepeer-review

220 Scopus citations

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 languageEnglish (US)
Pages (from-to)1123-1140
Number of pages18
JournalJournal of Operations Management
Volume25
Issue number6
DOIs
StatePublished - Nov 1 2007
Externally publishedYes

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

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