Incentive Mechanism and Subsidy Design for Construction and Demolition Waste Recycling under Information Asymmetry with Reciprocal Behaviors

Peiyang Su, Ying Peng, Qidan Hu and Ruwen Tan
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Peiyang Su: College of Architecture and Environment, Sichuan University, Chengdu 610065, China
Ying Peng: College of Architecture and Environment, Sichuan University, Chengdu 610065, China
Qidan Hu: College of Architecture and Environment, Sichuan University, Chengdu 610065, China
Ruwen Tan: College of Architecture and Environment, Sichuan University, Chengdu 610065, China

IJERPH, 2020, vol. 17, issue 12, 1-26

Abstract: To solve information asymmetry, we adopted the principal-agent framework to design the incentive mechanisms between the remanufacturer and the collector in the construction and demolition (C&D) waste-recycling industry. By using the model of reciprocity, we analyzed how the entities’ behavioral motives affect their decisions in terms of the incentive mechanisms. The findings showed that the collector responds to their perception of the remanufacturer’s intentions. If the perception is positive, they will make more effort in the collection work. If not, less effort will be put forth. Most importantly, we found that reciprocity helps to save the remanufacturer cost in the incentive mechanisms and makes the collector choose a higher effort level in the collection work. This finding showed that reciprocity serves to solve information asymmetry. By conducting a numerical simulation, we found that although a high subsidy policy can achieve rapid improvement of recycling-supply-chain performance, it is inefficient in maintaining friendly cooperation between the remanufacturer and the collector.

Keywords: construction and demolition waste; information asymmetry; incentive mechanism; reciprocity (search for similar items in EconPapers)
JEL-codes: I I1 I3 Q Q5 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

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