The potential for cannibalization of new products sales by remanufactured products

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Abstract

The potential for cannibalization of new product sales by remanufactured versions of the same product is a central issue in the continuing development of closed-loop supply chains. Practitioners have no fact-based information to guide practice at firms and academics have no studies available to use as the basis for assumptions in models. We address the cannibalization issue by using auctions to determine consumers' willingness to pay (WTP) for both new and remanufactured products. The auctions also allow us to better understand the potential impact of offering new and remanufactured products at the same time, which provides us insights into the potential for new product cannibalization. Our results indicate that, for the consumer and commercial products auctioned, there is a clear difference in WTP) for new and remanufactured goods. For the consumer product, there is scant overlap in bidders between the new and remanufactured products, leading us to conclude that the risk of cannibalization in this case is minimal. For the commercial product, there is evidence of overlap in bidding behavior, exposing the potential for cannibalization.

Original languageEnglish (US)
Pages (from-to)547-572
Number of pages26
JournalDecision Sciences
Volume41
Issue number3
DOIs
StatePublished - Aug 1 2010

All Science Journal Classification (ASJC) codes

  • Business, Management and Accounting(all)
  • Strategy and Management
  • Information Systems and Management
  • Management of Technology and Innovation

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