Differential pricing and production strategies for heterogeneous products under cannibalization and promotional effects

This study examines the optimal pricing and production strategy of a closed-loop supply chain consisting of a manufacturer, a recycler, and consumers. Considering the cannibal-ization and promotion effects of remanufactured products on new and secondhand products, we constructed Stackelberg game models under different scenarios. We analyze the impact of the changes in the two effects on the optimal prices and production stra-tegies of the manufacturer and recycler, as well as their countermeasures. We find that (i) how the cannibalization and promotional effects influence the manufacturer and the re-cycler's pricing and production strategies differ under different scenarios; (ii) when the two effects exceed a threshold, the manufacturer abandons new or remanufactured products, and the recycler prefers to stop production on its new products or continue to remanufacture products; and (iii) the two effects always reduce the profits of the manu-facturer and increase the profits of the recycler.(c) 2022 China Science Publishing & Media Ltd. Publishing Services by Elsevier B.V. on behalf of KeAi Communications Co. Ltd. This is an open access article under the CC BY-NC-ND license (http://creativecommons.org/licenses/by-nc-nd/4.0/).