Pricing under internal and external competition for remanufacturing firms with green consumers

This study considers a firm with a hybrid production system employed to simultaneously generate new and remanufactured products, which can be sold at specific prices for different quality levels. The proposed approach differs from other research in incorporating the chief elements of remanufacturing, consumer types, and competition in the considerations of the pricing strategy. In addition to the internal competition between these two types of products, the external competition from similar products is also contemplated to explore whether the eco-friendly image of remanufacturing products can affect sales. The objective of this study is thus to investigate the impacts of green consumers’ purchase behaviors on both the uncertain demands and prices of the corresponding competitive products in the market, so as to develop the optimal pricing strategy leading to maximum profit. The products’ demand functions for ordinary and green consumers are established, and the optimal prices of new, remanufactured, moderate-quality and low-quality competitive products are investigated through the derivative method. It is found that ordinary consumers have an upper bound of value in evaluating all the prices of competitive products when the new product is priced much higher than the remanufactured one. Moreover, the proposed approach may assist managers in devising adequate pricing strategies for different types of products to attract ordinary and green consumers, so as to improve the market share of the incumbent manufacturer.