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Environmental-Regulation Pricing Strategies for Green Supply Chain Management

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  • Chen, Yenming
  • Sheu, Jiuh-Biing

Abstract

This paper demonstrates that a proper design of environmental-regulation pricing strategies is able to promote Extended Product Responsibility for green supply chain firms in a competitive market. A differential game model comprising Vidale-Wolfe equation has been established in light of sales competition and recycling dynamics as well as regulation related profit function. Analytic solutions of Markovian Nash equilibriums are provided with the necessary condition derived from Hamilton-Jacobi-Bellman equations. We found that governments should opt to gradually raise regulation standards so that rational manufacturers will gradually improve its product recyclability, and, in turn, Extended Product Responsibility will get promoted.

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 25255.

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Date of creation: 01 Jun 2007
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Publication status: Published in Transportation Research Part E: Logistics and Transportation Review 5.45(2009): pp. 667-677
Handle: RePEc:pra:mprapa:25255

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Related research

Keywords: WEEE; E-waste; Incentive Mechanism; Competitive Market; Extended Production Responsibility; Differential Game; Optimal Control;

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References

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  1. Palmer, Karen & Walls, Margaret, 1997. "Optimal policies for solid waste disposal Taxes, subsidies, and standards," Journal of Public Economics, Elsevier, vol. 65(2), pages 193-205, August.
  2. Chongwoo Choe & Iain Fraser, 2001. "On the Flexibility of Optimal Policies for Green Design," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 18(4), pages 367-371, April.
  3. Stavins, Robert N., 2003. "Experience with market-based environmental policy instruments," Handbook of Environmental Economics, in: K. G. Mäler & J. R. Vincent (ed.), Handbook of Environmental Economics, edition 1, volume 1, chapter 9, pages 355-435 Elsevier.
  4. Mukhopadhyay, Samar K. & Setaputra, Robert, 2007. "A dynamic model for optimal design quality and return policies," European Journal of Operational Research, Elsevier, vol. 180(3), pages 1144-1154, August.
  5. Palmer, Karen & Walls, Margaret, 1999. "Extended Product Responsibility: An Economic Assessment of Alternative Policies," Discussion Papers dp-99-12, Resources For the Future.
  6. Foulon, Jerome & Lanoie, Paul & Laplante, Benoit, 2002. "Incentives for Pollution Control: Regulation or Information?," Journal of Environmental Economics and Management, Elsevier, vol. 44(1), pages 169-187, July.
  7. Vogelsang, Ingo, 2002. "Incentive Regulation and Competition in Public Utility Markets: A 20-Year Perspective," Journal of Regulatory Economics, Springer, vol. 22(1), pages 5-27, July.
  8. Carter, Craig R. & Jennings, Marianne M., 2002. "Social responsibility and supply chain relationships," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 38(1), pages 37-52, January.
  9. Ekins, Paul, 1999. "European environmental taxes and charges: recent experience, issues and trends," Ecological Economics, Elsevier, vol. 31(1), pages 39-62, October.
  10. Walls, Margaret, 2003. "The Role of Economics in Extended Producer Responsibility: Making Policy Choices and Setting Policy Goals," Discussion Papers dp-03-11, Resources For the Future.
  11. Adam B. Jaffe et al., 1995. "Environmental Regulation and the Competitiveness of U.S. Manufacturing: What Does the Evidence Tell Us?," Journal of Economic Literature, American Economic Association, vol. 33(1), pages 132-163, March.
  12. Fullerton, Don & Wu, Wenbo, 1998. "Policies for Green Design," Journal of Environmental Economics and Management, Elsevier, vol. 36(2), pages 131-148, September.
  13. Dockner,Engelbert J. & Jorgensen,Steffen & Long,Ngo Van & Sorger,Gerhard, 2000. "Differential Games in Economics and Management Science," Cambridge Books, Cambridge University Press, number 9780521637329.
  14. Kriwet, A. & Zussman, E. & Seliger, G., 1995. "Systematic integration of design-for-recycling into product design," International Journal of Production Economics, Elsevier, vol. 38(1), pages 15-22, March.
  15. Sheu, Jiuh-Biing & Chou, Yi-Hwa & Hu, Chun-Chia, 2005. "An integrated logistics operational model for green-supply chain management," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 41(4), pages 287-313, July.
  16. Duchin, Faye & Lange, Glenn-Marie, 1995. "The Future of the Environment: Ecological Economics and Technological Change," OUP Catalogue, Oxford University Press, number 9780195085747, September.
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Cited by:
  1. Hassini, Elkafi & Surti, Chirag & Searcy, Cory, 2012. "A literature review and a case study of sustainable supply chains with a focus on metrics," International Journal of Production Economics, Elsevier, vol. 140(1), pages 69-82.
  2. Gunasekaran, Angappa & Spalanzani, Alain, 2012. "Sustainability of manufacturing and services: Investigations for research and applications," International Journal of Production Economics, Elsevier, vol. 140(1), pages 35-47.
  3. Chen, Yenming & Wu, Tien-Hua, 2010. "The diffusion dynamics of the informal sector and sustainable WEEE supply chain," MPRA Paper 25650, University Library of Munich, Germany.
  4. Chen, Yenming & Wu, Tien-Hua, 2010. "Effective e-waste management-The role of international cooperation and fragementation," MPRA Paper 25902, University Library of Munich, Germany.
  5. Hong, I-Hsuan & Yeh, Jun-Sheng, 2012. "Modeling closed-loop supply chains in the electronics industry: A retailer collection application," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 48(4), pages 817-829.
  6. Sheu, Jiuh-Biing & Gao, Xiao-Qin, 2014. "Alliance or no alliance—Bargaining power in competing reverse supply chains," European Journal of Operational Research, Elsevier, vol. 233(2), pages 313-325.
  7. Rika Ampuh Hadiguna, 2012. "Decision support framework for risk assessment of sustainable supply chain," International Journal of Logistics Economics and Globalisation, Inderscience Enterprises Ltd, vol. 4(1/2), pages 35-54.
  8. Gavronski, Iuri & Klassen, Robert D. & Vachon, Stephan & Nascimento, Luis Felipe Machado do, 2011. "A resource-based view of green supply management," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 47(6), pages 872-885.
  9. Cheng, Jao-Hong, 2011. "Inter-organizational relationships and knowledge sharing in green supply chains—Moderating by relational benefits and guanxi," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 47(6), pages 837-849.
  10. Azevedo, Susana G. & Carvalho, Helena & Cruz Machado, V., 2011. "The influence of green practices on supply chain performance: A case study approach," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 47(6), pages 850-871.
  11. Chen, Yenming J. & Sheu, Jiuh-Biing & Lirn, Taih-Cherng, 2012. "Fault tolerance modeling for an e-waste recycling supply chain," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 48(5), pages 897-906.
  12. Nazzal, Dima & Batarseh, Ola & Patzner, Joshua & Martin, Darren R., 2013. "Product servicing for lifespan extension and sustainable consumption: An optimization approach," International Journal of Production Economics, Elsevier, vol. 142(1), pages 105-114.

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