Role of Trust-Building in Online Recycling Platforms

Abstract

Many studies have addressed the research questions in platform pricing and WEEE (Waste Electric and Electronic Equipment) collection. However, they may ignore the effect of trust-building in the online platform and how trust affects the optimal strategy built in the recycling platform. Consumers need to consider the price and credibility in the product recycling process due to the differentiated prices for the same products set by different online platforms. This work studies the profit or feasible bidding of recyclers and platforms with a degree of trust development in the reverse logistics system considering the following scenarios: online recycling platform builds trust or not under the centralized and decentralized models. The results show that the construction of trust can effectively bring more revenue to the system of the online recycling platform with enhanced demand if the cost of the trust-building construction is well controlled, especially in the centralized model. The revenue-sharing contract is more profitable than the cost-sharing contract but fails to reach the optimal one in the integrated setting, while the competing scenario could enhance the profit in a new way to outperform the decentralized model. We propose a new decision support tool for the optimal demand strategy under different decision-making models and coordination. This work helps the recycling platform make a better strategy or construction decision based on different reactions to the trust-building of customers.

Keywords: Sustainable Operations, Trust, Online platform, Transaction cost, recycling platform