The Implications of Recycling Technology Choice on Collective Recycling

40 Pages Posted: 14 Jun 2018 Last revised: 15 Feb 2019

See all articles by Luyi Gui

Luyi Gui

University of California, Irvine - Paul Merage School of Business

Morvarid Rahmani

Georgia Institute of Technology - Scheller College of Business

Atalay Atasu

Georgia Institute of Technology - Sustainability

Date Written: May 29, 2018

Abstract

We study the implications of recycling technology choice on an environmental benefit comparison between collective and individual recycling systems. Collective recycling systems have long been criticized (in practice and academia) for muting incentives for design-for-recycling, and in turn, restricting the environmental benefits from recycling relative to individual recycling systems. We revisit and refine this assertion by analyzing another critical aspect that determines the environmental effectiveness of recycling systems: recycling technology choice. We analyze how recycling technology choice by processors, and its interaction with producers' product design-for-recycling choices affect the environmental benefit comparison between collective and individual recycling systems. We develop game-theoretic models of individual and collective recycling systems where producers and processors decide on design-for-recycling and recycling technology choices, respectively. We also distinguish between cases with contracted and producer-owned recycling facilities, and analytically characterize and compare the equilibrium outcomes in these models. We show that collective recycling systems provide stronger incentives for recycling technology improvements, and can lead to higher environmental benefits from recycling than individual systems. This happens when recycling technology choice has a significant impact on recycling process efficiency, and the product mix in the collective system is not complex. It also depends on the recycling volume heterogeneity: When recycling facilities are contracted, a collective system provides higher environmental benefits when producers have similar recycling volumes. In contrast, when a producer-owned recycling facility is shared in a collective system, a certain degree of recycling volume heterogeneity between producers can lead collective systems to generate higher environmental benefits. An exclusive focus on product design-for-recycling to assess the environmental benefits of collective recycling needs scrutiny. Producers and policy makers need to evaluate recycling systems with respect to the incentives they provide for not only product design-for-recycling but also recycling technology choices.

Keywords: Recycling, Design for Environment, Recycling Technology, Complementarity, Co-development

Suggested Citation

Gui, Luyi and Rahmani, Morvarid 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

Luyi Gui

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

Irvine, CA California 92697-3125
United States

Morvarid Rahmani (Contact Author)

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

800 West Peachtree St.
Atlanta, GA 30308
United States

Atalay Atasu

Georgia Institute of Technology - Sustainability ( email )

800 West Peachtree St.
Atlanta, GA 30308
United States

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