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Determining Recycling Fees and Subsidies in China’s WEEE Disposal Fund with Formal and Informal Sectors

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Listed:
  • Huihui Liu

    (Academy of Chinese Energy Strategy, China University of Petroleum, Beijing 102200, China)

  • Xiaolin Wu

    (Academy of Chinese Energy Strategy, China University of Petroleum, Beijing 102200, China)

  • Desheng Dou

    (Academy of Chinese Energy Strategy, China University of Petroleum, Beijing 102200, China)

  • Xu Tang

    (School of Business Administration, China University of Petroleum, Beijing 102200, China)

  • G. Keong Leong

    (College of Business Administration and Public Policy, California State University Dominguez Hills, Carson, CA 90747, USA)

Abstract

At present, most of China’s waste electrical and electronic equipment (hereafter referred to as WEEE) flow into the informal recycling sector, which has no official disassembly certification. To regulate the WEEE recycling industry, the policy of the WEEE disposal fund has been implemented to levy recycling fees from producers and subsidize the formal recycling sector. This paper aims to solve the challenging problem of how to optimize recycling fees and subsidies. We first study the competition between the formal and informal sectors, and construct the game models of the dismantling and refurbishing processes. Based on the equilibrium outcomes, we then examine the impact of the disposal fund on producers, as well as the formal and informal recycling sectors. With the goal of maximizing social welfare and maintaining a balanced budget for the disposal fund, we study the optimal recycling fee levied on producers and the corresponding subsidy provided to the formal sector. Social welfare is a function of producer and formal-recycler profits, consumer surplus, and the negative externality caused by informal dismantling and refurbishing, such as environmental pollution and safety problems. Results show that the use of subsidy can increase the acquisition quantity of used products in the formal sector, but the increase will slow down with higher subsidy. If the recycling fee that producers are charged is small, social welfare will be improved. In addition, as the fee is increased, social welfare will rise first and then fall. As such, any excessive increase in recycling fees should be avoided.

Suggested Citation

  • Huihui Liu & Xiaolin Wu & Desheng Dou & Xu Tang & G. Keong Leong, 2018. "Determining Recycling Fees and Subsidies in China’s WEEE Disposal Fund with Formal and Informal Sectors," Sustainability, MDPI, vol. 10(9), pages 1-14, August.
    • Handle: RePEc:gam:jsusta:v:10:y:2018:i:9:p:2979-:d:165032
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    References listed on IDEAS

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    Cited by:

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    2. Ksenija Denčić-Mihajlov & Mladen Krstić & Dejan Spasić, 2020. "Sensitivity Analysis as a Tool in Environmental Policy for Sustainability: The Case of Waste Recycling Projects in the Republic of Serbia," Sustainability, MDPI, vol. 12(19), pages 1-19, September.
    3. Horațiu Vermeșan & Ancuța-Elena Tiuc & Marius Purcar, 2019. "Advanced Recovery Techniques for Waste Materials from IT and Telecommunication Equipment Printed Circuit Boards," Sustainability, MDPI, vol. 12(1), pages 1-23, December.
    4. Xiao-Shan Yang & Xiao-Xue Zheng & Tian-Yu Zhang & Ying Du & Fengru Long, 2021. "Waste Electrical and Electronic Fund Policy: Current Status and Evaluation of Implementation in China," IJERPH, MDPI, vol. 18(24), pages 1-27, December.
    5. Tingting Liu & Qian Zhang & Zichen Zheng & Shangyun Wu & Zhixiong Weng, 2022. "Stakeholder Analysis of the Waste Electrical and Electronic Equipment Internet Recycling Industry," IJERPH, MDPI, vol. 19(16), pages 1-13, August.
    6. Hilal Shams & Altaf Hossain Molla & Mohd Nizam Ab Rahman & Hawa Hishamuddin & Zambri Harun & Nallapaneni Manoj Kumar, 2023. "Exploring Industry-Specific Research Themes on E-Waste: A Literature Review," Sustainability, MDPI, vol. 15(16), pages 1-22, August.
    7. Qiang Xiao & Hongshuang Wang, 2022. "Prediction of WEEE Recycling in China Based on an Improved Grey Prediction Model," Sustainability, MDPI, vol. 14(11), pages 1-14, June.

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