2965. The Right to Repair: On the Impact of Mandated Reparability
Invited abstract in session WC-47: Game Theory in Retail I, stream Retail Operations.
Wednesday, 12:30-14:00Room: Parkinson B08
Authors (first author is the speaker)
| 1. | Junxia He
|
| Department of Finance and Economics, University of Luxembourg | |
| 2. | Benny Mantin
|
| Luxembourg Centre for Logistics and Supply Chain M, University of Luxembourg |
Abstract
RTR regulations aim to extend products’ lifespans by facilitating independent repairs and preventing consumers from discarding products that still hold value to mitigate environmental impacts. In this regard, product reparability plays a crucial role. To explore the mandatory reparability and its impacts on the profit, consumer surplus and waste, we develop a two-period game-theoretic model and solve the manufacturer’s pricing optimization problem. Our results suggest that in the absence of mandatory reparability, manufacturers provide repairs only when their repair cost is below a certain threshold. Mandating reparability might raise this cost threshold, thereby expanding the range of repair offerings. Besides, high reparability enables self-repairs, which in turn results with the manufacturer lowering the product and repairs prices. Numerical experiments indicate that only when the level of reparability is set above a certain level can consumer surplus and waste situation get improved; otherwise, the regulation may potentially lead to an outcome that consumer surplus and waste remain unchanged, while the manufacturer’s profit shrinks. In the end, the optimal reparability level depends on the welfare priorities assigned to different agents. An extremely high level of reparability is always the optimal solution to maximize the benefits of both consumers and environment, though this comes at the cost of a significant decline in the manufacturer’s profit.
Keywords
- Revenue Management and Pricing
- Game Theory
- OR in Sustainability
Status: accepted
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