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Optimal pricing and production strategies for two manufacturers with industrial symbiosis

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  • Tang, Xiaoying
  • He, Yong
  • Salling, Melissza

Abstract

This paper focuses on studying how the industrial symbiosis members determine the optimal production plan after weighing the demand for core products and the supply and demand of waste. Considering the government waste disposal tax, optimal solutions of two manufacturers who have the potential in achieving waste symbiosis are derived from different supply-demand relations of waste. Then, we find that the relationship between supply and demand is mainly affected by the price sensitivity of the customer in the downstream market, and the optimal solutions of each manufacturer are also affected by the other's cost factors or price sensitivities under certain circumstances. Besides, by comparing the optimal solutions under the mode of zero waste reduction, mode of waste reduction, and mode of industrial symbiosis, we find that when the customer in the downstream market is relatively sensitive to the price, and the price of raw materials is relatively high, both manufacturers are willing to choose industrial symbiosis. Also, a numerical study is introduced to understand the impact of waste reduction and industrial symbiosis on the total social welfare and the environmental benefit from the perspective of the government.

Suggested Citation

  • Tang, Xiaoying & He, Yong & Salling, Melissza, 2021. "Optimal pricing and production strategies for two manufacturers with industrial symbiosis," International Journal of Production Economics, Elsevier, vol. 235(C).
    • Handle: RePEc:eee:proeco:v:235:y:2021:i:c:s0925527321000608
    DOI: 10.1016/j.ijpe.2021.108084
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    2. Efrain Boom-Cárcamo & Rita Peñabaena-Niebles, 2022. "Analysis of the Development of Industrial Symbiosis in Emerging and Frontier Market Countries: Barriers and Drivers," Sustainability, MDPI, vol. 14(7), pages 1-32, April.

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