HighlightsWe analyze the optimal pricing decisions of a firm under the coexistence of TON and TOR programs.We indentify the thresholds that determine whether the firm should offer TON and TOR together.We analyze the effect of government budget constraints on the TOR subsidy on the firm’s decisions.
AbstractUnder the coexistence of “trade old for new” (TON) and “trade old for remanufactured” (TOR) programs, we study a firm’s optimal pricing decisions and identify the thresholds that determine whether the firm should offer TON and TOR simultaneously. The result shows that adopting two kinds of trade-ins simultaneously does not necessarily benefit the firm and that the firm should use different trade-in schemes under different conditions. Moreover, we extend the model to the case with budget constraints on the TOR subsidy. The result shows that the firm’s profit decreases when the actual TOR quantity exceeds the upper limit.
Optimal pricing decisions under the coexistence of “trade old for new” and “trade old for remanufactured” programs
2017-08-26
16 pages
Article (Journal)
Electronic Resource
English
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