Authority-enterprise equilibrium based mixed subsidy mechanism for the value-added treatment of food waste

Abstract

There is a huge amount of food waste worldwide and proper disposal can provide value-added products to the society. Food waste treatment requires the authority’s financial support because of its high costs and the treatment methods need to be further explored, but there is no effective approach to help the authority determine reasonable subsidy mechanisms and help enterprises to identify the technology application strategies. Therefore, a bi-level optimization model was constructed to find decision strategies that would satisfy both parties in the interaction between the local authority’s subsidy design and the food waste treatment plant’s identification of technology applications, where a mixed subsidy mechanism and technology integrations were considered. The proposed model was applied to a case study in Shanghai, China to investigate its feasibility and applicability. The influence of total amount of food waste and the related attitude of the local authority were analysed and discussed. Some management suggestions for different decision makers were proposed. It was found that while performance subsidies are preferred over transport and treatment subsidies, mixed subsidies are more favourable. Multi-technology integration facilitates the treatment plants’s profitability, and the share of technology application needs to be determined based on the actual. Food waste treatment systems can reduce carbon emissions while achieving energy self-sufficiency.