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Improving Recycling: How Far Should We Go?

Author

Listed:
  • Paul Belleflamme

    (Université catholique de Louvain
    CESifo)

  • Huan Ha

    (National Economics University)

Abstract

We analyze, in a game-theoretic model, the strategic interaction between competing firms that source their inputs from either primary or recycled material. Because the manufacturers’ primary production today serves as input for the recyclers’ production tomorrow, manufacturers can limit the recyclers’ scale of operation by reducing their output. Improving the recycling process generates then two opposite effects: it reduces primary production tomorrow by exposing manufacturers to stronger competition from recyclers, but it also lowers the manufacturers’ incentives to reduce their primary production today. If primary production exerts a negative externality on the environment, then making the recycling process too efficient might be counterproductive. This intuition equally applies to remanufacturing.

Suggested Citation

  • Paul Belleflamme & Huan Ha, 2024. "Improving Recycling: How Far Should We Go?," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 87(7), pages 1993-2033, July.
    • Handle: RePEc:kap:enreec:v:87:y:2024:i:7:d:10.1007_s10640-024-00880-z
    DOI: 10.1007/s10640-024-00880-z
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    More about this item

    Keywords

    Recycling; Remanufacturing; Circular economy; Strategic entry accommodation;
    All these keywords.

    JEL classification:

    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L72 - Industrial Organization - - Industry Studies: Primary Products and Construction - - - Mining, Extraction, and Refining: Other Nonrenewable Resources
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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