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Mathematical Problems in Engineering
Volume 2015, Article ID 325185, 18 pages
http://dx.doi.org/10.1155/2015/325185
Research Article

Price and Service Competition between New and Remanufactured Products

1School of Economics and Management, Beihang University, Beijing 100191, China
2School of Economics and Management, Dezhou University, Shandong 253023, China

Received 30 December 2014; Revised 18 March 2015; Accepted 29 March 2015

Academic Editor: Qing (Cindy) Chang

Copyright © 2015 Bin Wang and Jing Wang. This is an open access article distributed under the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.

Abstract

This paper sets two manufacturers on the market. One is traditional manufacturer, which produces new products, and the other remanufactures by recycling used products. Two manufacturers sell products to customers through one retailer and also provide product-related services. Three participators decide prices and service levels independently. We discuss the optimal decision of prices, service levels, demands, and profits in three scenarios: Manufacturers Stackelberg, Retailer Stackelberg, and Nash Equilibrium. We also study the influence of customer acceptance of remanufactured product on participators’ decisions. With the increase of , new product profit reduces; remanufactured product profit increases at the beginning and then decreases. Retailer profit grows steadily. In Manufacturers Stackelberg, new and remanufactured products can get the maximum profits, and retailer only has the minimum profit. In Retailer Stackelberg, retailer can get the maximum profit; new product only has the minimum profit and remanufactured product has the medium gain. In Nash Equilibrium, new product and retailer have the medium gains, and remanufactured product has the minimum profit.