A Strategic Approach To Improve Environmental Policy-Making For End-Of-Cycle Product Management

As they make decisions about collective goods, policy makers strive to apply objective standards to complex environmental issues. This challenge requires the use of analytic methods that can include the multiple dimensions of such complex problems. Life-cycle analysis is a physical model that is widely recognised for its utility in investigating and improving the environmental impacts across the supply chain. However, models such as environmental life-cycle analysis are insufficient by themselves for policy-making because they do not formally include the interdependent, dynamic, often socioeconomic choices that influence supply-chain firms, and thus affect environmental outcomes. We show that game theory can be applied to improve environmental policy-making for the end-of-cycle stages of supply chains by strategically considering environmental and economic incentives. These incentives are often dependant on previous life-cycle stages while affecting future life-cycle stages. We demonstrate these techniques with a case study of open-loop (out-of-network) pallet systems for shipping consumer goods while also discussing the remaining challenges.