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Socially optimal and fund-balanced advanced recycling fees and subsidies in a competitive forward and reverse supply chain

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  • Hong, I-Hsuan
  • Lee, Yi-Ting
  • Chang, Pei-Yu

Abstract

Advanced recycling fees (ARFs) and government subsidy fees are important for curtailing the consumption of new products and encouraging recycling and disposal of end-of-life (EOL) products. We introduce a model consisting of a leader (the Environmental Protection Agency, EPA) and two groups of followers (MIS firms and recyclers) consisting of manufacturers, importers and sellers, and recyclers which compete in both consuming and recycling markets. The EPA determines the ARFs paid by the MIS firms and the fees subsidizing recyclers to maximize the social welfare in closed-loop supply chains where the MIS firms and recyclers attempt to maximize their respective profit functions. To compare with current practice, we describe a conceptual fund balance model to determine the ARF and subsidy fee on the basis of the balance between total collected ARFs and expenditure of subsidies. Using numerical examples for the laptop computer market in Taiwan, we demonstrate that our results outperform the current practice.

Suggested Citation

  • Hong, I-Hsuan & Lee, Yi-Ting & Chang, Pei-Yu, 2014. "Socially optimal and fund-balanced advanced recycling fees and subsidies in a competitive forward and reverse supply chain," Resources, Conservation & Recycling, Elsevier, vol. 82(C), pages 75-85.
    • Handle: RePEc:eee:recore:v:82:y:2014:i:c:p:75-85
    DOI: 10.1016/j.resconrec.2013.10.018
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    2. Krystofik, Mark & Wagner, Jeffrey & Gaustad, Gabrielle, 2015. "Leveraging intellectual property rights to encourage green product design and remanufacturing for sustainable waste management," Resources, Conservation & Recycling, Elsevier, vol. 97(C), pages 44-54.
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    4. Tao, Zhang Gui & Guang, Zhong Yong & Hao, Sun & Song, Hu Jin & Xin, Dai Geng, 2015. "Multi-period closed-loop supply chain network equilibrium with carbon emission constraints," Resources, Conservation & Recycling, Elsevier, vol. 104(PB), pages 354-365.

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