Competitive advantage of qualified WEEE recyclers through EPR legislation

Wenhui Zhou, Yanfang Zheng and Weixiang Huang

European Journal of Operational Research, 2017, vol. 257, issue 2, 641-655

Abstract: Most of waste appliances in China are handled by unqualified recyclers, rather than by qualified ones equipped with advanced but costly technology. To address this problem, China implements a series of take-back legislations in the framework of Extended Producer Responsibility (EPR) with a self-financing subsidy scheme. To analyze the performance of the legislations, we develop a two-period model with a selling period run by a manufacturer and a recycling period conducted by two recyclers. We show that the self-financing condition gives an upper limit for the subsidy. We also show that this limit is not monotone in the recyclers’ competitiveness difference, and there may be a gap between the upper limit and the optimal subsidy that maximizes the social welfare, i.e., a larger subsidy does not necessarily render a larger welfare. Further, we numerically show that the legislations improve the environment performance, but decrease the total profits of the manufacturer and recyclers. Interestingly, the legislations may or may not decrease the consumer surplus.

Keywords: Game theory; Extended producer responsibility; Reverse supply chain; Self-financing subsidy (search for similar items in EconPapers)
Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (36)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ejores:v:257:y:2017:i:2:p:641-655

DOI: 10.1016/j.ejor.2016.07.050

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