Leveraging intellectual property rights to encourage green product design and remanufacturing for sustainable waste management

Abstract

There is increasing industrial and academic interest in remanufacturing as a more sustainable production process than those that utilize virgin or recycled materials, and therefore as a promising contributor to sustainable waste management plans. Yet, prevailing incentives are seemingly inadequate for achieving socially optimal rates of remanufacturing activity. The contribution of our paper is to combine the economics of green design literature with the concepts of “raising rivals’ costs” and the economics of intellectual property rights. In so doing, we show that a regulator could raise social welfare by strengthening original manufacturer (OM) intellectual property rights in exchange for a decrease in physical product attributes built into products by OMs that inhibit remanufacturing. This result suggests that the structure of intellectual property rights should be considered a policy lever in sustainable waste management planning.