THE ROLE AND INTERNALIZATION OF HOMOGENEOUS AND NON‐HOMOGENEOUS DESIGN EFFECTS IN RECYCLING SYSTEMS

Kazuhiko Nishimura

Metroeconomica, 2008, vol. 59, issue 2, 110-130

Abstract: This paper considers recycling systems in which producers and a monopolistic recycler are independent agents, while the design of products determined by the producer affects the recycler's productivity. It is found that such design effects could be internalized within the economy, if the monopolistic recycler pays the normative values of the wasted products according to their designs, while the producers formulate design so as to minimize the product's net price. However, if unfortunate, the equilibrium may fall into a local optimum and may not be stable. We also investigate how such property of the equilibrium could be changed if the recycler's productivity is influenced by the diversity in recycle design.

Date: 2008
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