A Stackelberg-Nash game framework for overcoming remanufacturing barriers in a duopoly

Abstract

In duopoly markets, less-preferred brands with lower customer acceptance often hesitate to adopt environmentally beneficial remanufacturing due to profitability concerns, especially when decisions involve the entire supply chain. This study proposes a Stackelberg–Nash game framework to explore optimal remanufacturing and pricing strategies for two competing supply chains, each comprising a manufacturer and an exclusive retailer. The model analyses both external competition between brands and internal competition between new and remanufactured products, considering customer acceptance levels and the availability of used products suitable for remanufacturing. Analytical results show that when manufacturing costs are low, remanufacturing increases the profit of the less-preferred brand without affecting the more-preferred one. When costs are high and the less-preferred brand is supported by its retailer, numerical results indicate that remanufacturing can still enhance profitability, with up to 24% higher profit compared to the no-remanufacturing case. However, when costs are prohibitively high, remanufacturing is unlikely to be viable without external incentives. Sensitivity analysis shows that increasing the customer acceptance level of the less-preferred brand typically reduces the more-preferred brand's profit and increases the less-preferred brand's profit, except when acceptance exceeds 80% under low-cost conditions, where intensified competition reduces the latter's profitability. Under high-cost conditions, increasing acceptance from 70% to 90% may lead to a 56% reduction in the more-preferred brand's profit and a 44% increase in the less-preferred brand's profit. The level of acceptance for remanufactured products also affects profitability differently across cost structures and strategic conditions, revealing that internal product competition shifts substantially depending on market and operational parameters.