The Implications of Recycling Technology Choice on Collective Recycling

37 Pages Posted: 14 Jun 2018 Last revised: 1 Oct 2020

See all articles by Morvarid Rahmani

Morvarid Rahmani

Georgia Institute of Technology - Scheller College of Business

Luyi Gui

University of California, Irvine - Paul Merage School of Business

Atalay Atasu

INSEAD

Date Written: May 29, 2018

Abstract

We study recycling technology choice, a critical factor that has received little attention in the context of extended producer responsibility, and its interaction with product design-for-recycling in driving the environmental benefits of recycling systems. Collective recycling systems have long been criticized for restricting the environmental benefits of extended producer responsibility because of free riding issues among producers, which can undermine incentives for product design-for-recycling. We revisit and refine this assertion by analyzing the interaction between recycling technology and product design-for-recycling choices. We develop game-theoretic models where producers and processors decide on product design-for-recycling and recycling technology choices, respectively. We then compare the equilibrium benefits of recycling in collective and individual systems. The key result in this paper is that when recycling technology choice is taken into account, collective recycling systems can lead to higher environmental and economic benefits than individual recycling systems. This is because collective recycling systems provide stronger incentives for recycling technology improvements. In turn, these improvements can help overcome the drawbacks associated with inferior product design-for-recycling outcomes caused by free riding concerns among producers in collective recycling systems. In light of these results, we posit that an exclusive focus on product design-for-recycling to assess the environmental benefits of extended producer responsibility-based recycling systems may need scrutiny. Producers and policy makers may need to evaluate recycling systems with respect to the incentives they provide for both product design-for-recycling and recycling technology improvements.

Keywords: Recycling Technology, Design for Environment, Extended Producer Responsibility, Game Theory

Suggested Citation

Rahmani, Morvarid and Gui, Luyi and Atasu, Atalay, The Implications of Recycling Technology Choice on Collective Recycling (May 29, 2018). Georgia Tech Scheller College of Business Research Paper No. 18-21, Available at SSRN: https://ssrn.com/abstract=3186900 or http://dx.doi.org/10.2139/ssrn.3186900

Morvarid Rahmani (Contact Author)

Georgia Institute of Technology - Scheller College of Business ( email )

800 West Peachtree St.
Atlanta, GA 30308
United States

Luyi Gui

University of California, Irvine - Paul Merage School of Business ( email )

Paul Merage School of Business
Irvine, CA California 92697-3125
United States

Atalay Atasu

INSEAD ( email )

Boulevard de Constance
77305 Fontainebleau Cedex
France

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