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Dynamic Incentive Mechanism Design for Recycling Construction and Demolition Waste under Dual Information Asymmetry

Author

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  • Qidan Hu

    (College of Architecture and Environment, Sichuan University, Chengdu 610065, China)

  • Ying Peng

    (College of Architecture and Environment, Sichuan University, Chengdu 610065, China)

  • Chunxiang Guo

    (College of Business, Sichuan University, Chengdu 610065, China)

  • Dong Cai

    (College of Business, Sichuan University, Chengdu 610065, China)

  • Peiyang Su

    (College of Architecture and Environment, Sichuan University, Chengdu 610065, China)

Abstract

The generation of construction and demolition waste (CDW) is a problem for societies aspiring to sustainability. In this regard, governments have the responsibility to support the CDW recycling through subsidies. However, the information asymmetry, as well as the “dynamic nature” of the CDW recycling market, results in a number of barriers for the government to promote CDW recycling. In this paper, we establish a mathematical model that includes the government and the recycling enterprise in the presence of dual information asymmetry including the unknown recycling technology level and unobservable recycling efforts in one-stage and two-stage cooperation. Using the incentive theory, the static and dynamic optimal recycling incentive contracts of the government were designed, and the optimal decisions of the recycler were identified. A numerical simulation revealed that by designing reasonable contracts, the government can encourage the recycler to report the true technical level and achieve information screening. Furthermore, the subsidy of the high-tech recycler remained unchanged under different circumstances. However, the subsidy of the low-tech recycler was closely related to the probability of misreporting and the proportion of technology types. This finding suggests that the government and recycler are inclined towards long-term dynamic cooperation.

Suggested Citation

  • Qidan Hu & Ying Peng & Chunxiang Guo & Dong Cai & Peiyang Su, 2019. "Dynamic Incentive Mechanism Design for Recycling Construction and Demolition Waste under Dual Information Asymmetry," Sustainability, MDPI, vol. 11(10), pages 1-24, May.
    • Handle: RePEc:gam:jsusta:v:11:y:2019:i:10:p:2943-:d:233766
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    Cited by:

    1. Deng Li & Ying Peng & Chunxiang Guo & Ruwen Tan, 2019. "Pricing Strategy of Construction and Demolition Waste Considering Retailer Fairness Concerns under a Governmental Regulation Environment," IJERPH, MDPI, vol. 16(20), pages 1-24, October.
    2. Sasha Shahbazi & Kerstin Johansen & Erik Sundin, 2021. "Product Design for Automated Remanufacturing—A Case Study of Electric and Electronic Equipment in Sweden," Sustainability, MDPI, vol. 13(16), pages 1-19, August.
    3. Julie Kamp Albæk & Sasha Shahbazi & Tim C. McAloone & Daniela C. A. Pigosso, 2020. "Circularity Evaluation of Alternative Concepts During Early Product Design and Development," Sustainability, MDPI, vol. 12(22), pages 1-25, November.
    4. Guanru Wang & Dariusz Krzywda & Sergey Kondrashev & Lubov Vorona-Slivinskaya, 2021. "Recycling and Upcycling in the Practice of Waste Management of Construction Giants," Sustainability, MDPI, vol. 13(2), pages 1-14, January.
    5. Sasha Shahbazi & Anna Karin Jönbrink, 2020. "Design Guidelines to Develop Circular Products: Action Research on Nordic Industry," Sustainability, MDPI, vol. 12(9), pages 1-14, May.
    6. Ruwen Tan & Xiang Qing & Jingsong Yang & Jing Zhang & Deng Li, 2022. "Analysis on Recycling Channel Selection of Construction and Demolition Waste in China from the Perspective of Supply Chain," IJERPH, MDPI, vol. 19(9), pages 1-17, April.

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