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Remanufacturing as a marketing strategy

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The profitability of remanufacturing systems for different cost, technology and logistics structures has been extensively investigated in the literature. The authors provide an alternative and somewhat complementary approach that considers further issues such as the existence of green segments, OEM competition and product life cycle effects. They show that profitability of a remanufacturing system strongly depends on these issues as well as their interactions. For a monopolist, we show that there exist thresholds on the green segment size, diffusion rate and on consumer valuations for the remanufactured products above which remanufacturing is profitable. Moreover, they show that under competition remanufacturing becomes an effective marketing strategy that allows the manufacturer to defend its market share through price discrimination.

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