Operational effectiveness of funding for waste electrical and electronic equipment disposal in China: An analysis based on game theory

Abstract

This paper analyzes the characteristics of waste electrical and electronic equipment (WEEE) market in China and the findings are as follows: WEEE are still seen as valuable goods, and a recovery and recycling system is thus in place naturally in China like in many other developing countries. A game theory model is therefore built here to find out how effective funding is for this recovery and recycling system. Analysis of this model reveals: (1) Some dismantling enterprises (formal dismantling enterprises) are in this funding system, while others (informal ones) are not, thus forming a dual WEEE dismantling system, after the funding system was launched; (2) To ensure effectiveness of the funding system, the funding provided for formal enterprises for each piece of WEEE they handle, after deducting the incremental cost incurred for environmental compliance, must exceed the difference between the unit selling prices of the dismantled devices at formal and informal dismantling enterprises. This difference is RMB 70.2, RMB 67.9, RMB 22.2, RMB 79.4 and RMB 68.3 respectively for televisions, refrigerators, washing machines, air conditioners and computers; (3) When the funding system was launched, WEEE recovery enterprises would raise WEEE prices to seek profit and this would channel part of the funding into the recovery segment of the market.