Towards Reuse: The Implications of Incentives and Convenience of Reusable Packaging

Abstract

Problem Definition: Growing environmental awareness is prompting consumers to consider reusable alternatives to disposable packaging, driving firms in the restaurant industry to explore reusable packaging models. In addition to encouraging consumers to use their personal reusable packaging, some firms now offer firm-owned reusable packaging as an alternative reuse option. However, the inconvenience associated with reusable packaging remains a critical barrier to widespread adoption. This paper examines how price incentives and convenience enhancements influence the profitability of reusable packaging models and their impact on consumer reuse adoption.

Methodology/Results: Using a game-theoretical model, we analyze the firm's optimal price incentive strategy when consumers choose among different packaging types (disposable, personal reusable, or firm-owned reusable).  We further examine how enhancing the convenience of reusable packaging impacts firm profitability and consumer reuse adoption. Our key findings are as follows. First, when a firm introduces its reusable packaging, it may increase (resp. decrease) the price discount for personal reusable packaging if the cost of disposable packaging is low (resp. high), implying a complementary (resp. substitution) effect between the two strategies. When the substitution effect is significant, it could reduce reusable adoption. Second, while enhancing the convenience of using consumers' personal reusable packaging generally benefits profit, improving the convenience of using firm-owned reusable packaging—even if costless for the firm to implement—may negatively affect the firm's profit. Finally, when a firm decides to offer reusable packaging, enhancing the convenience of either firm-owned or personal reusable packaging may paradoxically reduce reuse adoption, particularly when the cost of firm-owned reusable packaging is high for the firm.

Managerial Implications: We provide operational insights into how profit-driven firms can encourage the use of both firm-owned and personal reusable packaging in the restaurant industry, facilitating the transition to reusable packaging models.

Keywords: Reusable packaging, price incentives, convenience, consumer pro-environmental behavior, sustainability