Many products exhibit remanufacturability at more than one level i.e. their components can not only be used to manufacture a repeat product, they can also be used to manufacture simpler products. While such Multi-Level Remanufacturable Products (MLRPs) have shown promise in terms of cost savings and environmental benefits, no design methods are available which include consideration of these simpler, derivative products. This paper introduces the Remanufacture Dependency Matrix (RDM) as a metric of remanufacturability of a product to account for the possibility of it being remanufactured into simpler products. Although the derivative products depend on the parent product for components, they don't necessarily compete with it in the marketplace. While diffusion of products in the market in their first lifecycle is fairly understood, there is limited literature on diffusion characteristics incorporating subsequent lifecycles especially in the MLRP scenario. This paper also proposes a variation on the Bass diffusion model to investigate the effects of different levels of remanufacturability. A case study regarding the use of components from personal computers to manufacture book reading devices is presented to exemplify the approach. Our results show that profits can be increased while reducing the environmental impact at the same time.