Industrial Symbiosis: Operational Impact and Firms’ Willingness to Implement

38 Pages Posted: 1 Sep 2014 Last revised: 19 Jul 2019

See all articles by Yunxia Zhu

Yunxia Zhu

College of Business, University of Nebraska-Lincoln

Milind Dawande

University of Texas at Dallas - Department of Information Systems & Operations Management

Srinagesh Gavirneni

Cornell University - Samuel Curtis Johnson Graduate School of Management

Vaidy Jayraman

University of Miami

Date Written: July 16, 2019

Abstract

Industrial Symbiosis or By-Product Synergy is defined as a resource-sharing strategy that engages traditionally separate industries in a collective approach that involves a physical exchange of materials, water, energy, and by-products. Inspired by a real-world example of a paper-sugar symbiotic complex, we study the impact of competition on a firm’s willingness to implement an industrial symbiotic system. Sugar and paper firms are symbiotically connected, in the sense that the waste from the manufacture of one product is used as a raw material for the second product, and vice-versa. We characterize the firm’s operational optimal/equilibrium decisions for its two products – both in the presence and absence of a symbiotic system – under monopoly as well as under competition. Our models capture the supply-side (e.g., a fixed production cost and changes in the variable production costs) as well as the demand-side (“green” consumers who value the nature-friendly production process) impact of implementing industrial symbiosis. Our results indicate that firms are more willing to implement industrial symbiosis when (a) the proportion of the green consumers is high; or (b) consumers’ appreciation for the green variants is high; or (c) variable production costs after implementation are lower. For a firm, competition from firms that only produce regular products encourages implementation of industrial symbiosis, whereas competition from firms that produce both regular and green products discourages it.

Keywords: Industrial Symbiosis, Environmental Sustainability, Competition

Suggested Citation

Zhu, Yunxia and Dawande, Milind and Gavirneni, Srinagesh and Jayraman, Vaidy, Industrial Symbiosis: Operational Impact and Firms’ Willingness to Implement (July 16, 2019). Available at SSRN: https://ssrn.com/abstract=2489460 or http://dx.doi.org/10.2139/ssrn.2489460

Yunxia Zhu

College of Business, University of Nebraska-Lincoln ( email )

HLH 511 D
P.O. Box 880491
Lincoln, NE 68588
United States

Milind Dawande

University of Texas at Dallas - Department of Information Systems & Operations Management ( email )

P.O. Box 830688
Richardson, TX 75083-0688
United States

Srinagesh Gavirneni (Contact Author)

Cornell University - Samuel Curtis Johnson Graduate School of Management ( email )

Ithaca, NY 14853
United States

Vaidy Jayraman

University of Miami ( email )

Coral Gables, FL 33124
United States

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