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Extended Producer Responsibility for Durable Products

41 Pages Posted: 10 Aug 2014 Last revised: 13 Dec 2017

Isil Alev

Georgia Institute of Technology - The H. Milton Stewart School of Industrial & Systems Engineering (ISyE)

Vishal Agrawal

Georgetown University - McDonough School of Business

Atalay Atasu

Georgia Institute of Technology - Sustainability

Date Written: June 1, 2016

Abstract

Problem definition: We study how Extended Producer Responsibility (EPR) legislation implementations for durable products should differ from those for non-durable products.

Academic and Practical Relevance: Certain unique characteristics of markets for durable products, which make designing EPR implementations more challenging, have not been explored to date in academia and practice. We fill this void by investigating the effect of EPR on durable goods markets.

Methodology: We develop a game-theoretic model to analyze durable goods producers' secondary market strategy under EPR and analytically explore its environmental implications.

Results: The implications of EPR are not straightforward for durable products. On one hand, despite being focused on recycling, EPR may lead to an unintended benefit in the form of higher reuse levels by reducing producers' secondary market interference. On the other hand, EPR can also induce or increase secondary market interference by producers. This diminishes environmental goals such as reducing new production and increasing reuse levels, two key environmental goals with higher priority than increasing recycling.

Policy Implications: We offer insights for how the environmental effectiveness of EPR for durable products can be improved by appropriately choosing its implementation parameters. We show that implementation approaches that may be considered successful for non-durable products (e.g., packaging or end-of-life batteries), may not be suitable for durable products such as electronics. For example, more stringent collection targets and infrastructure requirements can backfire in EPR implementations for durable products.

Keywords: Durable goods, Sustainable operations, Environmental legislation, WEEE, Export restrictions

Suggested Citation

Alev, Isil and Agrawal, Vishal and Atasu, Atalay, Extended Producer Responsibility for Durable Products (June 1, 2016). Georgetown McDonough School of Business Research Paper No. 2477943; Georgia Tech Scheller College of Business Research Paper No. 25. Available at SSRN: https://ssrn.com/abstract=2477943

Isil Alev

Georgia Institute of Technology - The H. Milton Stewart School of Industrial & Systems Engineering (ISyE) ( email )

765 Ferst Drive
Atlanta, GA 30332-0205
United States

Vishal Agrawal (Contact Author)

Georgetown University - McDonough School of Business ( email )

3700 O Street NW
Washington, DC 20057
United States

Atalay Atasu

Georgia Institute of Technology - Sustainability ( email )

800 West Peachtree St.
Atlanta, GA 30308
United States

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