Opportunistic versus Life Cycle Oriented Decision Making in Multi-Loop Recovery - An ECO-ECO Study on Disposed Vehicles

CentER Discussion Paper Series No. 2009-83

20 Pages Posted: 26 Oct 2009

See all articles by H. R. Krikke

H. R. Krikke

Tilburg University - Center and Faculty of Economics and Business Administration

Date Written: October 14, 2009

Abstract

Multinational companies have recently been encouraged by government policies to implement Extended Producer Responsibility, defined as 'a policy approach in which producers accept significant responsibility, financial and/or physical, for the treatment or disposal of products'. One objective is to stimulate high level recovery, the other is to introduce life cycle thinking. This paper studies decision making in recovery, comparing opportunistic decision making with short term optimizing versus a life cycle perspective. After comparing the problem with the literature, a model is presented optimizing NPV of revenues and calculating environmental impact with cumulative energy demand. Sensitivity analysis tests strategies on various sources of uncertainty. Based on the results it is concluded that life cycle thinking, which materializes through multi-loop recovery, is preferred both economically and environmentally. Moreover, advises are formulated for industry and governments to improve their policies. Finally, future research is mapped based on handles and delineations of the study.

Keywords: disposition, life cycle, net present value, environmental impact, legislation, automotive

JEL Classification: Q28, K32, L62

Suggested Citation

Krikke, H. R. R., Opportunistic versus Life Cycle Oriented Decision Making in Multi-Loop Recovery - An ECO-ECO Study on Disposed Vehicles (October 14, 2009). CentER Discussion Paper Series No. 2009-83. Available at SSRN: https://ssrn.com/abstract=1494283 or http://dx.doi.org/10.2139/ssrn.1494283

H. R. R. Krikke (Contact Author)

Tilburg University - Center and Faculty of Economics and Business Administration ( email )

P.O. Box 90153
Tilburg, 5000 LE
Netherlands

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