Innovative Business Models in Ocean-Bound Plastic Recycling

48 Pages Posted: 28 Jun 2021 Last revised: 10 Apr 2024

See all articles by Opher Baron

Opher Baron

University of Toronto - Rotman School of Management

Gonzalo Romero

University of Toronto - Rotman School of Management

Zhuoluo Zhang

The Chinese University of Hong Kong (CUHK)

Sean Zhou

The Chinese University of Hong Kong (CUHK) - Department of Decision Sciences & Managerial Economics

Date Written: June 22, 2021

Abstract

Problem definition: About 30 million tons of plastic waste reach the oceans each year, most from developing coastal countries. We study novel business models of firms aiming to reduce ocean plastic pollution with a triple bottom line (TBL) objective--a weighted sum of profit, environmental and social impacts. These firms sell (a) plastic offsets and (b) segregated plastic.
Methodology/results: We develop and analyze models where a firm partners with a local plastic recycling supply chain to sell (a) or (b) or both via collecting and recycling ocean-bound plastic. Considering additionality, i.e., that the firm can only sell (a) or (b) based on recycled plastic that is additional to the plastic recycled without the firm's presence, we solve the equilibrium outcomes maximizing the firm's TBL objective. For the special case of a for-profit firm, we show that additionality increases the firm's social and environmental impacts when it sells (b) only, while it can decrease the firm's social and environmental impacts when selling (a) only or when selling both (a) and (b). Additionality may also alter the effect of the local recycled plastic market (i.e., the number of collectors and the recycled plastic price) on the firm. We find similar insights under the TBL objective via a numerical study calibrated with real data.
Managerial Implications: When firms decide whether to integrate and promote additionality, they must be careful since it may not only reduce their profit but also their social and environmental impacts. Moreover, we find that selling both (a) and (b) can generate a much higher TBL objective value than selling either one alone. We also find that firms employing a TBL objective can generate much larger environmental and social impacts with a slight reduction in profits than profit-maximizing firms. Our model and results provide insights into new initiatives for tackling ocean plastic pollution.

Keywords: Sustainable operations, business models, ocean-bound plastic recycling, triple bottom line (TBL)

Suggested Citation

Baron, Opher and Romero, Gonzalo and Zhang, Zhuoluo and Zhou, Sean, Innovative Business Models in Ocean-Bound Plastic Recycling (June 22, 2021). Rotman School of Management Working Paper No. 3871885, Available at SSRN: https://ssrn.com/abstract=3871885 or http://dx.doi.org/10.2139/ssrn.3871885

Opher Baron

University of Toronto - Rotman School of Management ( email )

Gonzalo Romero (Contact Author)

University of Toronto - Rotman School of Management ( email )

105 St. George Street
Toronto, Ontario M5S 3E6 M5S1S4
Canada

Zhuoluo Zhang

The Chinese University of Hong Kong (CUHK) ( email )

Shatin, N.T.
Hong Kong
Hong Kong

Sean Zhou

The Chinese University of Hong Kong (CUHK) - Department of Decision Sciences & Managerial Economics ( email )

Shatin, N.T.
Hong Kong

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