Entering the high-end market by collecting and remanufacturing a competitor's high-end cores

摘要

Motivated by the smartphone industry, this paper studies a duopoly channel consisting of a high-end firm and a low-end firm. The high-end firm sells its own brand at a high profit margin. The low-end firm sells its own brand at a low profit margin, but can choose to differentiate by collecting and reman-ufacturing high-end cores, thereby entering the more lucrative high-end market. We investigate how the equilibrium strategies of both firms are influenced by the cost structure and customers' valuation. We derive a condition for the low-end firm to engage in remanufacturing high-end cores, and show how the high-end firm reacts to limit the loss of market share. (C) 2019 Elsevier Ltd. All rights reserved.