Impact of China’s Recycling Subsidy Policy in the Product Life Cycle

This paper examines the impact of the Chinese recycling subsidy policy (CRS-policy) on the recycling and reuse industry across the whole product life cycle. We propose a closed-loop dynamic system to illustrate the production flow and interactions among various industry and market factors. A simulation analysis is conducted using data on gas auto engines in China to evaluate the effectiveness of the CRS-policy in encouraging product recycling and reuse. Specifically, we analyze the preventative and regenerative effects of the CRS-policy, and its impact on environmental pollution and social welfare. We further investigate how market factors, including the manufacturer’s innovation environment, consumer environmental awareness and sensitivity to the subsidy, and recycling and reuse industry profit, affect the effectiveness of the CRS-policy. The study provides strong evidence of the important role of the subsidy policy in the recycling and reuse industry and offers insightful recommendations for enhancing the effectiveness of the subsidy policy.

[1]  Panos L. Lorentziadis,et al.  A quantitative model of accelerated vehicle-retirement induced by subsidy , 2011, Eur. J. Oper. Res..

[2]  Jui-Che Tu,et al.  Analysis on the Relationship between Green Accounting and Green Design for Enterprises , 2015 .

[3]  I-Hsuan Hong,et al.  Socially optimal and fund-balanced advanced recycling fees and subsidies in a competitive forward and reverse supply chain , 2014 .

[4]  Rainer Kleber,et al.  On how buyback and remanufacturing strategies affect the profitability of spare parts supply chains , 2011 .

[5]  G. Finnveden,et al.  Policy Instruments towards a sustainable waste management , 2013 .

[6]  Markus A. Reuter,et al.  The time-varying factors influencing the recycling rate of products , 2004 .

[7]  Hong Chen,et al.  Post-seismic supply chain risk management: A system dynamics disruption analysis approach for inventory and logistics planning , 2014, Comput. Oper. Res..

[8]  Luk N. Van Wassenhove,et al.  Efficient Take‐Back Legislation , 2009 .

[9]  P. Georgiadis,et al.  Sustainability in electrical and electronic equipment closed-loop supply chains: A System Dynamics approach , 2008 .

[10]  Ruud H. Teunter,et al.  Optimal core acquisition and remanufacturing policies under uncertain core quality fractions , 2011, Eur. J. Oper. Res..

[11]  Erica L. Plambeck,et al.  Effects of E-Waste Regulation on New Product Introduction , 2009, Manag. Sci..

[12]  François Jeanjean.  Subsidising the next generation infrastructures. Consumer‐side or supply‐side? , 2010 .

[13]  Zhang Zhao,et al.  Production , Manufacturing and Logistics Dual-channel closed-loop supply chain with government consumption-subsidy , 2012 .

[14]  Thomas Spengler,et al.  Special Section: Closed-Loop Supply Chains: Practice and Potential: Strategic Management of Spare Parts in Closed-Loop Supply Chains - A System Dynamics Approach , 2003, Interfaces.

[15]  I-Hsuan Hong,et al.  Determining advanced recycling fees and subsidies in "E-scrap" reverse supply chains. , 2009, Journal of environmental management.

[16]  Cheryl T. Druehl,et al.  Design for the Environment: Life‐Cycle Approach Using a Newsvendor Model , 2013 .

[17]  Branka Dimitrijevic,et al.  Production planning for vehicle recycling factories in the EU legislative and global business environments , 2012 .

[18]  L. V. Wassenhove,et al.  An Operations Perspective on Product Take‐Back Legislation for E‐Waste: Theory, Practice, and Research Needs , 2012 .

[19]  Roberto Poles,et al.  System Dynamics modelling of a production and inventory system for remanufacturing to evaluate system improvement strategies , 2013 .

[20]  Pankaj Dutta,et al.  A system dynamics framework for integrated reverse supply chain with three way recovery and product exchange policy , 2013, Comput. Ind. Eng..

[21]  Laura Varela-Candamio,et al.  A Dynamic Model for Construction and Demolition (C , 2014 .

[22]  John D. Sterman,et al.  System Dynamics: Systems Thinking and Modeling for a Complex World , 2002 .

[23]  Dmitry Krass,et al.  Environmental Taxes and the Choice of Green Technology , 2013 .

[24]  J Swanson,et al.  Business Dynamics—Systems Thinking and Modeling for a Complex World , 2002, J. Oper. Res. Soc..

[25]  S. Webster,et al.  Competition in remanufacturing and the effects of government subsidies , 2008 .

[26]  Patroklos Georgiadis,et al.  The effect of environmental parameters on product recovery , 2004, Eur. J. Oper. Res..

[27]  N. Aras,et al.  Design and analysis of government subsidized collection systems for incentive-dependent returns , 2009 .