Optimal trade-in strategy of business-to-consumer platform with dual-format retailing model

Cao, Kaiying; Xu, Xiaoyan; Bian, Yiwen; Sun, Yanhong

doi:10.1016/j.omega.2018.01.004

Cited by 136 publications

(67 citation statements)

References 34 publications

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“…A report shows that online sales in the USA in 2017 reached $453.46 billion, which is an increase of 16% compared with that in 2016 [5]. In addition, some e-commerce giants such as Amazon.com and Tmall.com dominate the e-commerce market, and some firms, as third-party sellers, therefore sell their products on e-commerce platforms [6,7]. Compared with the case in the absence of online sales, a carbon tax policy taking online sales into account may have different effects on the competition between e-commerce platforms and third-party sellers and the optimal decisions of these members.…”

Section: Introductionmentioning

confidence: 99%

The Optimal Carbon Reduction and Return Strategies under Carbon Tax Policy

Wang

Huang

2018

Sustainability

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Recently, consumers have been increasingly shopping due to the development of e-commerce; thus, many traditional firms producing green products are entering e-commerce platforms to sell products for their survival. In the contexts of online sales and carbon tax policy, firms need to determine an optimal carbon reduction level and online return strategies. To address firms' decision-making challenges, we consider a firm producing and selling its green products via an e-commerce platform. For optimal online return strategies, we find that if the residual value of the returned product is relatively small, the firm should not offer an online return service; otherwise, the firm should offer this service. Moreover, the results show that carbon tax policy is detrimental to the firm and consumers, while increasing the average customer satisfaction rate of the product benefits the firm and consumers. Interestingly, we find that the platform should reduce its referral fee as the unit carbon tax increases.

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Section: Introductionmentioning

confidence: 99%

The Optimal Carbon Reduction and Return Strategies under Carbon Tax Policy

Wang

Huang

2018

Sustainability

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“…Unit carbon tax E Total carbon emission T Annual service fee charged by the platform Following Yenipazarli [20] and Cao et al [21], consumers are heterogeneous with respect to new product valuation φ which is uniformly distributed from 0 to 1. Moreover, similar to Ferguson and Toktay [22], we assume that consumers' willingness to pay for a remanufactured product is a fraction α of their willingness to pay for a new product.…”

Section: Notation Description P Simentioning

confidence: 99%

Optimal Channel Choice of Firms with New and Remanufactured Products in the Contexts of E-Commerce and Carbon Tax Policy

Cao

Wang

2019

Sustainability

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: This paper is motivated by the dilemma faced by firms who sell new and remanufactured products offline that need to consider whether to enter e-commerce platforms considering that more and more consumers are shopping online on e-commerce platforms rather than shopping offline. Our paper aims to help firms with new and remanufactured products make a channel choice and determine product pricing strategies in the contexts of e-commerce and carbon tax policy. Our paper uses optimization theory, game theory, utility functions and profit-maximization models to investigate the optimal channel choice of whether a firm should enter an e-commerce platform; it also investigates the optimal prices of new and remanufactured products and referral fees in two cases—the firm does not enter the platform (N) and the firm enters the platform (Y). Some insights are presented as follows: We found that the firm should enter the platform if the annual service fee is relatively low, otherwise, the firm should not enter the platform. Interestingly, in the case of a firm with an offline store with relatively large operational costs or hassle costs, the firm is more reluctant to enter the platform. In the extension, we considered some consumers who only purchase offline products, and found that the firm considering these consumers is more likely to choose not to enter the platform. Moreover, we argue that the carbon tax policy has a positive effect on product prices but a negative effect on referral fees charged by the platform, and the choice of Y hurts the environment due to a relatively high total carbon emission.

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“…Zhu et al (2016) compare two enterprises that implemented/did not implement "trade-in" in a duopoly environment; then, a two-stage competitive environment is introduced to determine the trade-in threshold, and they concluded that the trade-in could bring a competitive advantage to the market share and profit of an enterprise [16]. Also, there is much literature examining remanufactured products and the pricing and production strategies of TON (Yan et [17][18][19][20][21][22][23]. For instance, Miao et al (2017) developed three closed-loop supply chain (CLSC) decision models for TON: concentrated recycling, recycling by retailers, and recycling by manufacturers.…”

Section: Trade-old-for-new (Remanufactured) Literaturementioning

confidence: 99%

“…Based on the assessment of life cycles, the study shows that TON can boost the environmental performance of the CLSC system, and that trade-in strategies can be used to stimulate consumer demand and boost profits for manufacturers and retailers only if the direct net value of a used product is high enough [19]. Cao et al (2018) show the best trade-in strategy for enterprises using B2C platforms with self-owned stores or a third-party store retail model. They discuss how businesses can offer trade-in rebates to consumers with gift cards (GC) or cash coupons (CC), and they find that GC and CC are not always good for the platform [22].…”

Section: Trade-old-for-new (Remanufactured) Literaturementioning

confidence: 99%

“…Cao et al (2018) show the best trade-in strategy for enterprises using B2C platforms with self-owned stores or a third-party store retail model. They discuss how businesses can offer trade-in rebates to consumers with gift cards (GC) or cash coupons (CC), and they find that GC and CC are not always good for the platform [22]. The literature contributes to a good understanding of TON, while there is little literature on TOR pricing and production strategies.…”

Section: Trade-old-for-new (Remanufactured) Literaturementioning

confidence: 99%

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Trade-Old-for-Remanufactured Closed-Loop Supply Chains with Carbon Tax and Government Subsidies

et al. 2018

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The constantly increasing CO2 emissions are threatening the environment tremendously. Facing the pressure of environmental activists and public opinion, businesses and governments are taking action to reduce carbon emissions. Among these endeavors, carbon tax and subsidy policies proposed by governments are widely adopted. Remanufacturing is believed to save manufacturing costs and reduce carbon emissions from the process of enterprise operation, and it is increasingly being accepted by enterprises. However, different consumers’ willingness to pay for remanufactured products and the durability of new products will also affect consumers’ willingness to buy remanufactured products. Therefore, considering the discrepancy between consumer willingness to pay and product durability, we established the trade-old-for-remanufactured (TOR) model for a scenario of carbon tax and government subsidies. Through the analysis of the model, we obtained the optimal pricing and production decisions of manufacturers (remanufacturers) in the case of carbon tax and government subsidies. Our results show that, when there is no carbon tax constraint, the increase in consumer willingness to pay and the adjustment in product durability can stimulate consumers to participate in TOR projects and augment enterprises’ profits. However, it can also lead to a carbon rebound that increases corporate carbon emissions. When there is a carbon tax constraint, the introduction of carbon tax contributes to a reduction in carbon emissions, while enterprises tend to lose profits. In order to achieve a “win-win” between corporate profits and carbon emissions, we considered government subsidy policies. Our numerical examples illustrate that appropriate carbon tax and government subsidies can curb carbon emissions and also increase profits for enterprises.

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Optimal trade-in strategy of business-to-consumer platform with dual-format retailing model

Cited by 136 publications

References 34 publications

The Optimal Carbon Reduction and Return Strategies under Carbon Tax Policy

The Optimal Carbon Reduction and Return Strategies under Carbon Tax Policy

Optimal Channel Choice of Firms with New and Remanufactured Products in the Contexts of E-Commerce and Carbon Tax Policy

Trade-Old-for-Remanufactured Closed-Loop Supply Chains with Carbon Tax and Government Subsidies

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