Circular Business Models: Product Design and Consumer Participation

Stefan Buehler, Rachel Chen and Daniel Halbheer
Additional contact information
Rachel Chen: UC - University of California

Working Papers from HAL

Abstract: This paper develops an analytical framework to study how firms should design a product by choosing its recyclability and price in a market where consumers adopt a life-cycle approach and decide whether to recycle an end-of-life product. We show that the firm offers a non-recyclable product in the absence of a reverse supply chain even if consumers care about recyclability – the linear take-make-dispose model. By operating a reverse supply chain, the firm generates revenue from both sales and recycling, and determines recyclability by balancing the marginal changes in the consumers' expected end-of-life utility and the unit production cost net of the expected value of the recovered resources. We identify conditions under which the firm offers a fully recyclable product and all consumers return the product for recycling – the fully circular model. In addition, we show that stronger concerns about recyclability and a higher market value of the recovered resources increase recyclability, but have an ambiguous impact on price, demand, profit, and the overall waste footprint of the firm. Further, we characterize the conditions under which transitioning from a linear to a circular business model is profitable and socially desirable. Finally, we show when a deposit-refund system, product buyback, and retaining product ownership are effective tools to boost circularity.

Keywords: Circular business model; waste footprint; resource footprint; recycling; reverse supply chain; pricing (search for similar items in EconPapers)
Date: 2022-12-30
New Economics Papers: this item is included in nep-com and nep-ind
Note: View the original document on HAL open archive server: https://hec.hal.science/hal-03938305v1
References: Add references at CitEc
Citations:

Downloads: (external link)
https://hec.hal.science/hal-03938305v1/document (application/pdf)

Related works:
Working Paper: Circular Business Models: Product Design and Consumer Participation (2023)
Working Paper: Circular Business Models: Product Design and Consumer Participation (2023)
Working Paper: Circular Business Models: Product Design and Consumer Participation (2022)
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:hal:wpaper:hal-03938305

DOI: 10.2139/ssrn.4314781

Access Statistics for this paper

More papers in Working Papers from HAL
Bibliographic data for series maintained by CCSD ().