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EPR Reference Database

Publication type: Academic Journal Article

Competitive strategy in remanufacturing and the impact of take-back laws

Abstract/summary

This paper examines the impact of take-back laws within a manufacturer/remanufacturer competitive framework. Take-back laws require that firms take responsibility for the collection/disposal costs of their products. We consider two alternative implementations of take-back laws that are distinguished by the degree of control that the manufacturer has on returns sold to the remanufacturer. In one implementation, known as collective WEEE take-back, the manufacturer has no control over returns sold to the remanufacturer. The other implementation, known as individual WEEE take-back, gives complete control to the manufacturer. We develop a general two-period model to investigate questions of interest to policy-makers in government and managers in industry. Our results suggest that, in some settings, enactment of collective WEEE take-back will result in higher manufacturer and remanufacturer profits while simultaneously spurring remanufacturing activity and reducing the tax burden on society. A negative effect is higher consumer prices in the market. In other settings, we find that collective WEEE take-back introduces a structural change to the industry-creating an environment where remanufacturing becomes profitable when it is not profitable without a take-back law. With respect to individual WEEE take-back, we find that the manufacturer often benefits from allowing the remanufacturer to enter the market, though from a government policy-maker perspective, there are clear risks of monopolistic behavior. (c) 2007 Elsevier B.V. All rights reserved.

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Author(s)
Scott Webster
Supriya Mitra
Journal
Journal of Operations Management
Year
2007
Volume and issue
25, 6
Pages
1123-1140
DOI
10.1016/j.jom.2007.01.014
URL
http://dx.doi.org/10.1016/j.jom.2007.01.014
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