Repurposing Materials and Waste through Online Exchanges: Overcoming the Last Hurdle

Online material and waste exchanges (OMWEs) provide online channels to repurpose by-products, unused materials and waste from industrial and commercial facilities. Unfortunately, OMWE's also have challenges. First, sellers may have access to other disposal options and, as a result, may not fully commit to the exchange. Second, buyers can face high uncertainty about the product exchanged and the transaction being undertaken. Overcoming these challenges is the last hurdle to making OMWEs successful. This study investigates the factors that reduce the buyers' uncertainty and increase the sellers' commitment to the OMWE. We analyze novel transaction-level data from an online exchange (MNExchange.org) combined with other archival public records on county-level repurposing and disposal statistics. First, we find that regional repurposing policies and alternatives have a complementary effect on sellers' commitment toward OMWEs, resulting in increased OMWE exchanges. However, regional disposal policies and alternatives have a substitution effect on sellers' commitment, resulting in reduced exchange success. Further, greater product and transaction information reduce the buyer's uncertainty and increase exchange success. Finally, the analysis shows that users' (buyers and sellers) heavily rely on their prior experience with OMWEs. Specifically, higher familiarity between the buyer-seller pair and familiarity with the OMWE system leads to higher likelihood of exchange success. This study lays the foundation for understanding OMWEs and has important implications for developing policies and operations to increase online transactions of by-products, materials and wastes.