Consider the Remanufactured Product Pricing Decisions of Green Preference Consumers

Abstract

We consider the case that consumers have strong green preference, that is, consumers value remanufactured products more than new products. With the goal of maximizing the profit and social welfare of the original product manufacturer and the remanufacturer respectively, this paper study the impact of consumer green preference degree, optimal profit and maximum social welfare value were investigated by using two-stage Stackelberg game analysis and backward induction. The results show that: (1) With the increase of consumers' green preference, the optimal price of stage 2 products increases, and the price of remanufactured products increases significantly; However, the price of new products in stage 2 gradually decreases. In addition, with the increase of consumers' green preference, the profit value of the original product manufacturer decreases gradually, while the profit of the remanufacturer increases gradually. In addition, consumer surplus increases with the increase of green preference, but the growth rate is slow. 2) With the increase of consumers' green preference, the optimal pricing of new products shows a decreasing trend. However, there is a unique threshold to distinguish the influence of green preference coefficient on the optimal price of remanufactured products. When consumers' green preference is greater than the threshold, the optimal price of remanufactured products is positively correlated with it. Overall, the Original Product Manufacturer's profit decreases with the increase of consumers' green preference, while the remanufacturer's profit increases first and then decreases. When the goal is to maximize social welfare, the pricing of new products is the cost of new products, and the optimal pricing of remanufactured products increases gradually with the increase of consumers' green preference. When pursuing the maximization of social welfare, only the existence of external incentives can achieve the maximization of social welfare. Therefore, the accurate positioning of remanufactured products, the comprehensive understanding of consumers' preference for remanufactured products and appropriate government incentives have a significant impact on the optimal pricing decision of products and the profit of remanufacturers.