The Interaction between Selling of New Products and Recycling of Old Products Under the Trade-In Policy

In order to stimulate consumption, the trade-in policy becomes a general choice for many firms when new-generation products were released. In this work, we studied the interaction between the selling of new products and the recycling of old products under the trade-in policy. First, the recycling model of old products under the trade-in policy is compared with the pure recycling model in the secondhand market. Then, the selling model of new products under the trade-in policy is compared with the pure selling model of new products. Third, the two models under the trade-in policy are extended by considering the heterogeneity of consumer evaluation. Several crucial conclusions are induced from comparisons: 1) Considering the influence coefficient of new products on the valuation of old products, the recycling price under the trade-in policy is not always higher than the secondhand market, thus firms do not always profit from recycling. 2) As in common sense, the trade-in policy could always increase the demand for new products. However, if considering the conversion rate of demand and the recycling pricing, the selling price and total profit are not always higher than the pure model of new products selling. 3) The supply function and the recycling price of old products are affected by consumer heterogeneity. Due to the interaction between the recycling of old products and the selling of new products, the selling price of new products are also affected