Dynamic strategic interactions between a municipality and a firm in the presence of an extended producer responsibility regulation. (10th April 2021)

• Record Type: Journal Article
• Authors: Pazoki, Mostafa; Zaccour, Georges
• Is Part Of: Journal of cleaner production. Volume 292(2021)
• Publication Date: 2021-04-10
• Subjects: Extended producer responsibility -- Environmental awareness -- Collection infrastructure -- Dynamic game -- Stackelberg equilibrium; Factory and trade waste -- Management -- Periodicals; Manufactures -- Environmental aspects -- Periodicals; Déchets industriels -- Gestion -- Périodiques; Usines -- Aspect de l'environnement -- Périodiques; 628.5
• DOI: 10.1016/j.jclepro.2021.125966
• Languages: English
• ISSNs: 0959-6526

Abstract

Abstract: In this exploratory study, we consider an extended producer responsibility (EPR) regulation in the context where a firm can be penalized by a municipality for each uncollected unit of past sold products. A starting point is that the return rate of used products depends on the available infrastructure and on consumers' environmental awareness. These two assets can be increased by investing in the infrastructure and in promoting the importance of returning the products instead of throwing them in the garbage. As environmental awareness and infrastructure can only be built through sustained investments over time, we retain a dynamic game model. This game feature accounts for the strategic interactions between the manufacturer and the municipality. A feedback Stackelberg equilibrium is sought, with the municipality acting as leader and the manufacturer as follower. In particular, we look at the scenario where the penalty for uncollected products is dynamic and determined on the basis of the observed states. Among the findings of this paper, we highlight that (i) a more successful collection program is associated with a lower price, and (ii) even in the presence of a penalizing regulation, it could be beneficial for the producer to produce browner products.