ABSTRACT
Enlarging market share and increasing profit of the remanufactured commodity drives remanufacturing practices in many areas. Due to the intensive upgrading nature of high-technology products, the remanufactured items of the latest technology are launched when the new goods belonging to the earlier generation are still available. Price decision is critical for the survival of both products. Manufacturers and retailers address pricing policies differently to maximize their profits. This chapter creates a value-based pricing model for new and remanufactured products belonging to different generations in various conditions and discusses the optimal wholesale and retail prices in a vertical Nash equilibrium model. The piecewise demand functions are generated based on the customer’s perceived value on technology and quality in two segments—quality-conscious and technology-savvies. We found that the optimal pricing decision is modified when the proportion of the two customer categories is changed. We also revealed how value differentiation between the two groups influence the prices and the profits of the retailer, manufacturer, remanufacturer, and the joint supply chain.
