Analysis of competitive manufacturers’ collection decisions given cross-shareholding and capital constraints

Entrusting a third party and implementing a trade-in program are two main ways for manufacturers to collect used products. By establishing two closed-loop supply chain competition models, this study analyses the co-existence conditions of third-party collection and trade-in collection adopted by competitive manufacturers M(1) and M(2) respectively. Then, based on an analysis of the impact of R&D improvement on the collection decision, the impacts of horizontal cross-shareholding and financing parameters on the collection decision and profit are explored, respectively. The results show that when consumers are low-value customers who prefer cash back over purchasing a new product, competitive manufacturers with different collection channels consider improving their R&D level. The R&D improvement of M(1) reduces the trade-in price and the third-party collection price, and shrinks the collection market. However, the R&D improvement of M(2) increases the trade-in price and the third-party collection price. In addition, the trade-in collection market shrinks and the third-party collection market increases. In the case of cross-shareholding, the increase of M(1)'s share helps reduce the trade-in price and the third-party collection price, while the increase of M(2)'s share helps increase the trade-in price and the third-party collection price. In factoring financing, the increase in the factoring rate reduces the total collection quantity in the collection market, but helps improve the earnings of M(2) from the collection of used products. In the case of equity financing, the increase in equity not only increases the total amount of collection, but also the earning of M(1) from the collection of used products.