Selection of Recycling Channels and Product Eco-Design with Take-Back Regulation

The influence of government policies on the selection of recycling channels has been widely discussed, but there are few studies from the perspective of product Eco-design. This paper examines the recycling channel options for a manufacturer applying Eco-design under government environmental regulation. We consider a system that includes a retailer, a manufacturer, and a government, and develop a three-stage Stackelberg game model. The government firstly decides whether to impose environmental regulations. Next, the manufacturer decides whether to recycle by himself or delegate the recycling task to the retailer, deciding both the wholesale price of the product and the collected price (recycled by the manufacturer) or the recycling compensation to the retailer (recycled by the retailer), and the retailer decides the retail price of new products and the collection price (recycled by the retailer). Our study finds that for the regulator, the optimal policy is not to implement environmental regulation because the manufacturer has implemented the product Eco-design. For the manufacturer, the choice of recycling channel depends on the recycling cost of the manufacturer and the retailer. When the manufacturer's recycling cost is below a certain threshold, he will prefer to recycle the waste products by himself, and when the cost increases beyond this threshold, the manufacturer will transfer the recycling task to the retailer.

Automated summary

This study found that the optimal policy for the regulator is not to implement environmental regulations because the manufacturer has implemented product Eco-design. The choice of recycling channel for the manufacturer depends on the recycling cost of the manufacturer and the retailer. When the manufacturer's recycling cost is below a certain threshold, he will prefer to recycle by himself, otherwise, the task will be transferred to the retailer.