Reverse supply chain recycling decisions via Pigovian theory: A value heterogeneity perspective

Efficient reuse of low-value construction and demolition waste (CDW) is crucial in CDW recycling. However, in reality, material remanufacturers and CDW recyclers only engage in low-value CDW recycling when benefits are substantial. In view of this, this study aims to elucidate the underlying mechanism through which Pigouvian-inspired targeted subsidy (PTS) influences the recycling of low-value CDW, thereby offering a theoretical foundation and strategic guidance for the formulation of relevant policies and the optimization of recycling processes. This study innovatively incorporates Pigouvian theory into the CDW recycling supply chain, constructs a supply chain model considering the heterogeneity of CDW recycling value through a Stackelberg game, and compares recovery volumes between high/low-value CDW and profitability across different operational modes. The findings can be summarized as follows: (1) Under different recycling modes, there are significant differences in the subsidy rate of PTS threshold for encouraging low-value CDW recycling. (2) The recycling mode with the participation of remanufacturers is helpful to realize the efficient recycling of CDW, but the price competition between the two will not be conducive to the healthy development of recyclers. (3) The recycling quantity of remanufacturers participating in the recycling of value heterogeneous CDW is not always better than the single recycling of recyclers. (4) When the remanufacturer participates in the recovery of low-value CDW, it is most conducive to the supply chain to recover high-value CDW. When the remanufacturer participates in the recovery of high-value CDW, it is most conducive to the supply chain to recover low-value CDW.