Recovery Targets and Taxation/Subsidy Policies to Promote Product Reuse

Sam Aflaki () and Shumail Mazahir ()

No 1091, HEC Research Papers Series from HEC Paris

Abstract: This paper seeks to identify the optimal policies for promoting product recovery and remanufacturing. Using a stylized equilibrium model, the authors analyze the problem as a Stackelberg game between a regulator and a monopolistic firm. They compare three types of policies that legislated regulation could effect: (i) A recovery target policy that requires firms to recover no less than a specified fraction of their production for proper disposal or possible remanufacturing; (ii) a taxation policy that both taxes manufacturing and subsidizes remanufacturing; and (iii) a newly introduced mixed approach that incorporates a recovery target as well as taxes and subsidies. They study a firm's behavior under the three policy types, including pricing decisions for new and remanufactured products as well as the strategic decision of whether to create a secondary channel for remanufactured products. They find that legislative intervention makes it more likely that firms will maintain a single-market strategy. The authors further demonstrate the mixed approach's superiority as measured by a comprehensive set of economic and environmental criteria, and show that this finding is robust under two different objective functions for the policy maker, one that does and one that does not entail a budget neutrality constraint.

Keywords: product recovery; remanufacturing; optimal sustainable policies; closed-loop supply chains (search for similar items in EconPapers)
Pages: 34 pages
Date: 2015-04-04
New Economics Papers: this item is included in nep-env and nep-pbe
References: Add references at CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2591297 (application/pdf)
Our link check indicates that this URL is bad, the error code is: 410 Gone (http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2591297 [301 Moved Permanently]--> https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2591297)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ebg:heccah:1091

Access Statistics for this paper

More papers in HEC Research Papers Series from HEC Paris HEC Paris, 78351 Jouy-en-Josas cedex, France. Contact information at EDIRC.
Bibliographic data for series maintained by Antoine Haldemann ().