Remanufacturing

Posted: 30 Oct 2012

See all articles by Sophie Bernard

Sophie Bernard

CIRANO and École Polytechnique de Montréal; Polytechnique Montreal

Multiple version iconThere are 2 versions of this paper

Date Written: November 30, 2011

Abstract

This paper presents a theoretical model of remanufacturing where a duopoly of original manufacturers produces a component of a final good. The specific component that needs to be replaced during the lifetime of the final 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 firms on the level of remanufacturability increases both profit 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 profit and consumer surplus. Part of this result supports the Porter Hypothesis, which stipulates that industries respecting environmental regulations can see their profits increase.

Keywords: Remanufacturing, Competition, Environmental Regulation, Porter Hypothesis

JEL Classification: H23, L10, L51, Q53, Q58

Suggested Citation

Bernard, Sophie, Remanufacturing (November 30, 2011). Journal of Environmental Economics and Management, Vol. 62, No. 3, 2011. Available at SSRN: https://ssrn.com/abstract=2168208

Sophie Bernard (Contact Author)

CIRANO and École Polytechnique de Montréal ( email )

2020 rue University, 25th floor
Montreal H3C 3J7, Quebec
Canada

Polytechnique Montreal ( email )

Montreal H3C 3A7, Quebec
Canada

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