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Recycling With Endogeneous Consumer Participation

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  • Soham Baksi
  • Ngo Van Long

    ()

Abstract

We show that the cost of sorting and the network effects jointly determine the rate of participation of consumers in the process of recycling. The dominant producer of virgin material takes into account the recycling activities when it makes its pricing decision. The network effects can create multiplicity of steady-state equilibria. The government can improve welfare by influencing equilibrium selection. On montre que le coût de triage et les effets de réseau déterminent le taux de participation des consommateurs au processus de recyclage. La firme dominante tient compte des activités de recyclage en choisissant le prix du produit primaire. Les effets de réseau peuvent créer la multiplicité d’équilibres stationnaires. Le gouvernement peut améliorer le bien-être social par son influence sur le choix d’équilibres.

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Bibliographic Info

Paper provided by CIRANO in its series CIRANO Working Papers with number 2006s-08.

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Date of creation: 01 May 2006
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Handle: RePEc:cir:cirwor:2006s-08

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Keywords: dominant firm; multiple equilibria; network effect; recycling; effet de réseau; firme dominante; multiplicité d’équilibres; recyclage;

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  1. Martin, Robert E, 1982. "Monopoly Power and the Recycling of Raw Materials," Journal of Industrial Economics, Wiley Blackwell, vol. 30(4), pages 405-19, June.
  2. Valerie Y. Suslow, 1986. "Estimating Monopoly Behavior with Competitive Recycling: An Application to Alcoa," RAND Journal of Economics, The RAND Corporation, vol. 17(3), pages 389-403, Autumn.
  3. Gérard Gaudet & Ngo Van Long, 2003. "Recycling Redux: A Nash-Cournot Approach," The Japanese Economic Review, Japanese Economic Association, vol. 54(4), pages 409-419.
  4. Gaskins, Darius Jr., 1974. "Alcoa revisited: The welfare implications of a secondhand market," Journal of Economic Theory, Elsevier, vol. 7(3), pages 254-271, March.
  5. George A. Akerlof & Rachel E. Kranton, 2005. "Identity and the Economics of Organizations," Journal of Economic Perspectives, American Economic Association, vol. 19(1), pages 9-32, Winter.
  6. Hollander, A. & Lasserre, P., 1984. "Monopoly and the Preemption of Competitive Recycling," Cahiers de recherche 8428, Universite de Montreal, Departement de sciences economiques.
  7. Grant, Darren, 1999. "Recycling and market power: A more general model and re-evaluation of the evidence1," International Journal of Industrial Organization, Elsevier, vol. 17(1), pages 59-80, January.
  8. Swan, Peter L, 1980. "Alcoa: The Influence of Recycling on Monopoly Power," Journal of Political Economy, University of Chicago Press, vol. 88(1), pages 76-99, February.
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