DYNAMIC PRICING OF A MANUFACTURER PRODUCING NEW/REMANUFACTURED PRODUCTS WITH CONSIDERATION OF STRATEGIC GREEN CONSUMERS

Flourishing sales of new and remanufactured products have prompted firms to design different pricing strategies for strategic green consumer behavior. To this end, this paper studies a pricing strategy by developing a two-period game model in a remanufacturing system by considering the period and product discounts. Here, the manufacturer has two pricing strategies: dynamic pricing and compensation pricing. Unlike the extant literature on strategic consumers, this paper considers heterogeneous products existing in a remanufacturing system and focuses on how strategic/green consumption behavior affects the pricing strategy. The results through numerical studies indicate that when the consumers' preference for remanufactured products is high, or consumers are short-sighted, the manufacturers prefer a dynamic pricing strategy; in all other cases, a compensation pricing strategy is preferred. Conversely, a manufacturer looking to the long-term benefits favors a compensation pricing scenario. Overall, the green segment is beneficial to the manufacturer, especially when primary consumers show a high preference for remanufactured products.

Automated summary

This paper examines pricing strategies in a remanufacturing system, taking into account consumer preferences and behavior. The results show that manufacturers should consider consumer preferences and short-sightedness when choosing a pricing strategy.