Manufacturer's Pricing Strategy Choice and Third Party's Collection Rate Under Consumers' Social Interactions and Environmental Responsibility

Consumers' social interactions and environmental responsibility are two critical determinants of whether consumers buy a product or not. Consumers' social interactions affect their environmental responsibility behaviors, which further affects their consumption values of remanufactured products and demands for new and remanufactured products. This article develops game models to study the pricing strategy and collection rate decision in the presence of consumers' social interactions and environmental responsibility. Two pricing strategies (uniform pricing and differentiated pricing) are explored. Our analysis yields four main insights. First, differentiated pricing may hurt the manufacturer's economic benefits while the retailer induces the manufacturer to adopt differentiated pricing. Second, consumers' social interactions affect the third party's collection. When consumers have high acceptance degrees of remanufactured products, the collection rate is higher under differentiated pricing in a market with consumers' social interactions while the third party collects more used products under uniform pricing in one without consumers' social interaction. Third, uniform pricing conforms to the manufacturer's economic and environmental interests when consumers have strong social interactions or there are few green consumers with a low acceptance degree. Finally, a high mean or variance of the negative strength of consumers' social interactions strengthens the manufacturer's incentive to use uniform pricing.