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 M₁ and M₂ 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 M₁ reduces the trade-in price and the third-party collection price, and shrinks the collection market. However, the R&D improvement of M₂ 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 M₁'s share helps reduce the trade-in price and the third-party collection price, while the increase of M₂'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 M₂ 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 M₁ from the collection of used products.