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

a b s t r a c t Advanced recycling fees (ARFs) and government subsidy fees are important for curtailing the consump- tion 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 com- pete 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.

[1]  I-Hsuan Hong,et al.  Decentralized decision-making and protocol design for recycled material flows , 2008 .

[2]  Luk N. Van Wassenhove,et al.  Reverse Channel Design: The Case of Competing Retailers , 2006, Manag. Sci..

[3]  Mir Saman Pishvaee,et al.  A robust optimization approach to closed-loop supply chain network design under uncertainty , 2011 .

[4]  Mir Saman Pishvaee,et al.  A possibilistic programming approach for closed-loop supply chain network design under uncertainty , 2010, Fuzzy Sets Syst..

[5]  R. Gibbons.  Game theory for applied economists , 1992 .

[6]  Matthew J. Realff,et al.  Robust reverse production system design for carpet recycling , 2004 .

[7]  Jiuh-Biing Sheu,et al.  Environmental-Regulation Pricing Strategies for Green Supply Chain Management , 2009 .

[8]  Maryann Wolverton,et al.  The Case for a Two-Part Instrument: Presumptive Tax and Environmental Subsidy , 1997 .

[9]  Li-Hsing Shih,et al.  Reverse logistics system planning for recycling electrical appliances and computers in Taiwan , 2001 .

[10]  Luk N. Van Wassenhove,et al.  Closed - Loop Supply Chain Models with Product Remanufacturing , 2004, Manag. Sci..

[11]  S. Sarangi,et al.  No return, no refund: an analysis of deposit-refund systems , 2001 .

[12]  Ignasi Puig-Ventosa,et al.  Potential use of feebate systems to foster environmentally sound urban waste management. , 2004, Waste management.

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

[14]  Jane C. Ammons,et al.  A Product and Process Selection Model with Multidisciplinary Environmental Considerations , 1999, Oper. Res..

[15]  L. V. Wassenhove,et al.  Interactions between operational research and environmental management , 1995 .

[16]  Takayoshi Shinkuma,et al.  On the Second-best Policy of Household's Waste Recycling , 2003 .

[17]  D. Fullerton,et al.  Policies for Green Design , 1996 .

[18]  S. Bansal,et al.  Tax/subsidy policies in the presence of environmentally aware consumers , 2003 .

[19]  Ad J. de Ron,et al.  Disassembly and recycling of electronic consumer products: an overview , 1995 .

[20]  Jacques-François Thisse,et al.  On the taxation of polluting products in a differentiated industry , 1999 .

[21]  C. Hicksa,et al.  The recycling and disposal of electrical and electronic waste in China—legislative and market responses , 2005 .

[22]  Takeshi Hoshino,et al.  Optimization analysis for recycle-oriented manufacturing systems , 1995 .

[23]  B. Laplante,et al.  Incentives for Pollution Control: Regulation or Information? , 2002 .

[24]  Chulho Jung,et al.  Incentives for Advanced Pollution Abatement Technology at the Industry Level: An Evaluation of Policy Alternatives , 1996 .

[25]  H. Groenevelt,et al.  COMPETITION IN REMANUFACTURING , 2001 .

[26]  V. Verter,et al.  An Analysis of Monopolistic and Competitive Take‐Back Schemes for WEEE Recycling , 2011 .

[27]  Rommert Dekker,et al.  A characterisation of logistics networks for product recovery , 2000 .

[28]  K. Conrad.  Resource and Waste Taxation in the Theory of the Firm with Recycling Activities , 1999 .

[29]  I-Hsuan Hong,et al.  Planning the e-Scrap Reverse Production System Under Uncertainty in the State of Georgia: A Case Study , 2006, IEEE Transactions on Electronics Packaging Manufacturing.

[30]  Terry P. Harrison,et al.  Special Section: Closed-Loop Supply Chains: Practice and Potential: The Challenge of Closed-Loop Supply Chains , 2003, Interfaces.

[31]  Simme Douwe Flapper,et al.  Product recovery in stochastic remanufacturing systems with multiple reuse options , 2001, Eur. J. Oper. Res..

[32]  C H Lee,et al.  Management of scrap computer recycling in Taiwan. , 2000, Journal of hazardous materials.

[33]  I-Lin Wang,et al.  Fast Heuristics for Designing Integrated E-Waste Reverse Logistics Networks , 2007, IEEE Transactions on Electronics Packaging Manufacturing.