Choice of E-Waste Recycling Standard Under Recovery Channel Competition

Manufacturing and Service Operations Management, Forthcoming

32 Pages Posted: 11 Apr 2019

See all articles by Gokce Esenduran

Gokce Esenduran

Purdue University - Department of Management

Yenting Lin

University of San Diego

Wenli Xiao

School of Business, University of San Diego

Minyue Jin

University of San Diego - School of Business Administration

Date Written: September 1, 2018

Abstract

Problem definition: We consider two competing electronic waste (e-waste) recovery channels, each of which consists of a collector and a recycler. Collectors obtain donated e-waste and sell the collected items to recyclers or in the secondary market, while recyclers process e-waste and sell the recycled material in the commodity market. Each recycler chooses for certification of one of two standards: e-Stewards or Responsible Recycling (R2). E-Stewards requires comparably more responsible handling, thus a higher processing cost, but attracts more e-waste from environmentally conscious donors.

Academic/practical relevance: Despite the rapid growth of e-waste, the operations management community still understands little about e-waste processing supply chains. We add to this body of knowledge by capturing three salient features in the e-waste recovery industry: the existence of two recycling standards, the secondary market, and competition both within and between recovery channels.

Methodology: We model the problem as a Stackelberg game and characterize the firms’ equilibrium decisions, deriving managerial insights through sensitivity analysis and numerical studies.

Results: Competition between recovery channels is a key factor motivating e-Stewards adoption, whereas a recycler always chooses R2 in its absence. Interestingly, when competition exists both within and between recovery channels, recyclers with strong e-waste processing scale economies choose e-Stewards when incurring significantly higher processing costs than with R2. Furthermore, both the total environmental benefit and welfare might be higher when recyclers choose R2.

Managerial implications: Policy makers who aim to encourage e-Stewards adoption should (1) lower entry barriers for new recyclers to induce competition and (2) offer incentive programs to alleviate e-Stewards’ cost disadvantage, though only when recyclers have weak scale economies. Policy makers and non-governmental organizations, however, should exercise caution in endorsing e-Stewards because R2 actually may generate a higher environmental benefit because of higher recycling volumes.

Keywords: e-waste recycling, recycling standards, channel competition, secondary market

Suggested Citation

Esenduran, Gokce and Lin, Yenting and Xiao, Wenli and Jin, Minyue, Choice of E-Waste Recycling Standard Under Recovery Channel Competition (September 1, 2018). Manufacturing and Service Operations Management, Forthcoming, Available at SSRN: https://ssrn.com/abstract=3352600

Gokce Esenduran (Contact Author)

Purdue University - Department of Management ( email )

West Lafayette, IN 47907-1310
United States

Yenting Lin

University of San Diego ( email )

5998 Alcala Park
San Diego, CA 92110-2492
United States

Wenli Xiao

School of Business, University of San Diego ( email )

5998 Alcala Park
University of San Diego
San Diego, CA 92110
United States

Minyue Jin

University of San Diego - School of Business Administration ( email )

5998 Alcala Park
San Diego, CA 92110-2492
United States

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