The market for remanufactured products made from marine plastic waste is expanding rapidly, but the recycling rate of this waste remains strikingly low. This disconnect forces conventional plastic recycling firms to make a consequential strategic choice: enter the marine plastic recycling supply segment by expanding to build market power or enter by competing as a specialized supplier. To examine this trade-off, this paper develops a two-period game-theoretic model that contrasts entry strategies and performance under monopolistic and competitive market structures. We derive and compare equilibrium pricing, quantities, and profits for the relevant supply chain participants in both settings and then characterize the conditions under which one entry mode dominates the other. The results indicate that neither the preferred entry strategy nor the profitability that follows is driven by a single parameter. Instead, outcomes are shaped by the joint effects of consumer tastes, remanufacturing costs, and the scale of capacity investment cost required for entry. When consumers show a stronger preference for conventional remanufactured products, a supplier pursuing monopolistic expansion can earn higher profits by offering a more flexible product portfolio. By contrast, when the cost of remanufacturing marine plastics and the associated capacity investment cost are relatively low, the environment favors a specialized, competitively oriented entry strategy. Profit allocation within the supply chain is also closely tied to remanufacturer costs: as these costs fall, suppliers are able to appropriate a larger share of total profits. Overall, the analysis provides a theoretical basis for entry decisions in the emerging marine plastic recycling industry and offers actionable guidance for firms facing different demand and cost conditions across market structures.
Wang et al. (Mon,) studied this question.