Remanufacturing
Abstract
This paper presents a theoretical model of remanufacturing where a duopoly of
original manufacturers produces a component of a Önal good. The speciÖc component
that needs to be replaced during the lifetime of the Önal good creates a secondary
market where independent remanufacturers enter the competition. An environmental
regulation imposing a minimum level of remanufacturability is also introduced. The
main results establish that, while collusion of the Örms on the level of remanufacturability
increases both proÖt and consumer surplus, a social planner could use collusion
as a substitute for an environmental regulation. However, if an environmental regulation
is to be implemented, collusion should be repressed since competition supports the
public intervention better. Under certain circumstances, the environmental regulation
can increase both proÖt and consumer surplus. Part of this result supports the Porter
Hypothesis, which stipulates that industries respecting environmental regulations can
see their proÖts increase.
Remanufacturing
Abstract
This paper presents a theoretical model of remanufacturing where a duopoly of
original manufacturers produces a component of a Önal good. The speciÖc component
that needs to be replaced during the lifetime of the Önal good creates a secondary
market where independent remanufacturers enter the competition. An environmental
regulation imposing a minimum level of remanufacturability is also introduced. The
main results establish that, while collusion of the Örms on the level of remanufacturability
increases both proÖt and consumer surplus, a social planner could use collusion
as a substitute for an environmental regulation. However, if an environmental regulation
is to be implemented, collusion should be repressed since competition supports the
public intervention better. Under certain circumstances, the environmental regulation
can increase both proÖt and consumer surplus. Part of this result supports the Porter
Hypothesis, which stipulates that industries respecting environmental regulations can
see their proÖts increase.
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