Interplay Between Servicizing and Remanufacturing: Economic and Environmental Implications.

The article investigates the interplay between servicizing—a circular economy strategy where manufacturers retain product ownership and offer functionality on a pay-per-use basis—and remanufacturing, which restores used products to like-new condition. Using optimization models, it finds that the presence of remanufacturing generally discourages firms from adopting servicizing due to market competition at the low-usage end, while servicizing can either encourage or deter remanufacturing depending on the extent of remanufacturing cost reduction it enables. Joint adoption of both strategies is most profitable when remanufacturing costs are moderate and is influenced by factors such as demand pooling effectiveness and operating costs of remanufactured products. Environmentally, joint adoption improves performance only under specific conditions—particularly when remanufacturing costs and environmental impacts are low—otherwise, it may increase environmental harm by reducing the market for low-impact remanufactured products. The study highlights that circular economy strategies are context-dependent, urging firms and policymakers to tailor approaches based on industry characteristics rather than applying uniform solutions.