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Abstract Consumers have different willingness to pay for new products and remanufactured products, and original equipment manufacturer (OEM) has brand advantage. This study investigates the production decisions and the conditions of OEM licensing or investing in remanufacturing under three competitive situations with game theory. The results show that the cost of production, consumer’s awareness of remanufactured products and OEM brand advantage can affect optimal pricing and optimal yield of OEM’s products and the third party’s remanufactured products; OEM is likely to authorize when OEM brand advantage is not notable; the remanufacturing cost of the third party is lower, an the cost of OEM is conversely higher, or consumer awareness of remanufactured products is higher; the third-party remanufacturer will accept OEM licensing when authorization can save enough cost for its product; if OEM brand is significant or consumers have a lower willingness to pay for remanufactured products, the third-party would like to accept OEM’s licensing; OEM should like to invest in remanufacturing only when its remanufacturing cost is low and it can get enough profits; however, OEM prefers to invest in remanufacturing when its brand advantage is great, consumers’ willingness to pay for remanufactured products is stronger, and the third party’s remanufacturing cost is higher.
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Received: 28 March 2016
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2016, Vol. 13 
