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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.
Huihui Liu; Xiaolin Wu; Desheng Dou; Xu Tang; G. Keong Leong. Determining Recycling Fees and Subsidies in China’s WEEE Disposal Fund with Formal and Informal Sectors. Sustainability 2018, 10, 2979 .
AMA StyleHuihui Liu, Xiaolin Wu, Desheng Dou, Xu Tang, G. Keong Leong. Determining Recycling Fees and Subsidies in China’s WEEE Disposal Fund with Formal and Informal Sectors. Sustainability. 2018; 10 (9):2979.
Chicago/Turabian StyleHuihui 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 10, no. 9: 2979.
While remanufacturing is highly encouraged worldwide, some original equipment manufacturers (OEMs) in the electrical and electronics industry are still not willing to embrace remanufacturing, for fear of expensive investment or the cannibalization of existing products. Meanwhile, third-party remanufacturers’ (TPRs) remanufactured products are developing quickly. Due to quality reasons, consumers usually have a higher preference for OEM-certified remanufactured products than uncertified ones. As such, remanufacturing certification has become a strategy that OEMs can use to benefit from product remanufacturing. Our paper focuses on the remanufacturing certification contract between an OEM and a TPR. Once certified, the TPR makes payments to the OEM. These payment terms will affect their enthusiasm for participating in remanufacturing certification. By establishing game models among an OEM, a certified TPR, and an uncertified TPR, our paper explores three certification contracts, namely, the lump-sum payment, profit-sharing payment, and piece-rate payment. We identify the conditions for the OEM and certified TPR to reach a win-win outcome. Our results show that when TPRs have a high profit margin and there is no significant difference in consumers’ preferences between certified and non-certified remanufacturing channels, the profit-sharing payment contract yields the highest profit; otherwise, the piece-rate payment contract is best for the OEM.
Huihui Liu; Xiaohang Yue; Hui Ding; G. Keong Leong. Optimal Remanufacturing Certification Contracts in the Electrical and Electronic Industry. Sustainability 2017, 9, 516 .
AMA StyleHuihui Liu, Xiaohang Yue, Hui Ding, G. Keong Leong. Optimal Remanufacturing Certification Contracts in the Electrical and Electronic Industry. Sustainability. 2017; 9 (4):516.
Chicago/Turabian StyleHuihui Liu; Xiaohang Yue; Hui Ding; G. Keong Leong. 2017. "Optimal Remanufacturing Certification Contracts in the Electrical and Electronic Industry." Sustainability 9, no. 4: 516.