Pricing strategy in remanufacturing using a spatial model approach

One of the critical issues in remanufacturing strategy is determining the selling prices for the multiple differentiated versions of the new and remanufactured products. This study deals with such pricing decisions in closed-loop supply chains where the demand is assumed to be price- and reusability-dependent function with partially substitutable between different versions of the product. In light of the unique and practical demand function, the Salop spatial model is used to formulate the demand model where the consumer preference and the substitution effect are considered. The analytical and numerical results suggest that the prices of the new and remanufactured products increase in the similarity between multiple versions of the product. This study contributes to the literature by simultaneously considering the effects of pricing and reusability, yet the prior studies are neglecting such effects.