A two-level supply chain is studied which consists of a manufacturer and a retailer．Manufacturer channel encroachment models with remanufacturing and without remanufacturing respectively，are established to explore the interplay among product remanufacturing，channel competition and manufacturer encroachment behavior．The results are as follows．1)Remanufacturing alleviates channel conflict by offering a lower average product cost，which in turn motivates the manufacturer to encroach．2)The manufacturer’sencroachment directly harms the retailer in the no-remanufacturing case．In contrast，remanufacturing has a positive externality at the retailer level，which enhances the retailer’spay of as long as the two channels do not compete intensely． However,this externality cannot fully counterbalance channel conflict when the two channels are more competitive，so the encroachment harms the retailer．3)The externality of remanufacturing is stronger when the manufacturer reduces the collection costs or increases remanufaeturing cost savings．Consequently，the Pareto gains in the supply chain enlarges．Finally，several extensions to our model verify that our model is still robust after considering the following cases：retailer collecting，quantity competition and multiple retailers．