Abstract
In order to improve the recovery rate of waste products and maximize the social welfare, this paper investigates the problem of government setting a recovery rate threshold for the recycler in the closed-loop supply chain (CLSC) with the information asymmetry. By establishing the government incentive regulation model, the government can disclose the true recovery cost of the recycler and guide the recycler to make an reasonable effort. In this study, our model obtains the best recovery rate threshold for the recycler from the perspective of maximizing social welfare. Then, we conduct some sensitivity analyses and explore the impacts of related factors on the strategies-making of government and supply chain players. The results of the study indicates that the recovery rate threshold set not only depends on the operation efficiency of the recycler, it also affected by the consumers behavior and the production efficiency of manufacturer. The government should not pursue a high recovery rate blindly, more attention should be paid to control the cost of effort made by the recycler. With the increasing of the negative utility for the recycler to make effort, the government will improve the recovery threshold, otherwise, the threshold will decrease. The results facilitate scientific incentive mechanism development, and provide a reference for promoting CLSC operations.
Highlights
In the 21st century, a large amount of waste electronic equipment have attracted people’s attention
According to the analysis of the threshold, this paper provides the basis for the government to formulate a reasonable incentive mechanism for the enterprises under the dual information asymmetry
Under the government incentive regulation, the manufacturer as the leader in the closed-loop supply chain (CLSC) and the recycler carries out the recycling activities, this paper studies the government incentive mechanism and the CLSC decisions under the condition of dual information asymmetric in moral hazard and adverse selection
Summary
In the 21st century, a large amount of waste electronic equipment have attracted people’s attention. Wang et al [29] applied the incentive theory to study how the manufacturer designs an incentive mechanism to guide the recycler to improve the recovery effort under the dual- information asymmetry, but the research did not consider the impact of government intervention on the decision-making of the supply chain. Based on the previous research, this paper applies the incentive theory, we consider a CLSC composed of the manufacturer, the recycler and the consumers under government incentive regulation, and study the problem of how the government develops a recovery rate threshold for the recycler in the waste products market with dual information asymmetry.
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