How Should e-Product OEMs Invest in Design for Remanufacturing Under the Take-Back Regulation in a Competitive Environment?

This study investigates the effects of take-back regulations and remanufacturing competition on e-product OEM design for remanufacturing (DfR) strategies and remanufacturing decisions within a closed-loop supply chain. Considering the monopolistic remanufacturing scenario where the remanufacturer does not enter the remanufacturing market as a benchmark model, we establish a Stackelberg game model involving an OEM and a remanufacturer to explore the OEM's optimal DfR decisions under take-back regulations and in a competitive environment. The Lagrangian function and Karush-Kuhn-Tucker conditions are formulated to identify the optimal solutions. The findings reveal the following: (i) Whether the remanufacturer engages in remanufacturing activity or not, take-back regulation consistently prompts OEMs to increase DfR investment. (ii) DfR investment level is lower in competitive markets compared to monopolistic scenarios, while remanufactured product output is higher. (iii) While consumer welfare improves with remanufacturer entry, environmental benefits deteriorate due to potential increased competition. Notably, competitive remanufacturing is advantageous for OEMs only when take-back regulation is stringent and the cost savings of remanufactured products are relatively low.