Tying product reuse into tying arrangements to achieve competitive advantage and environmental improvement

Abstract

Established understandings of ecological systems highlight patterns of simplified material composition and production systems matched to efficiently cycle natural materials. Applied to industrial systems, significant opportunity is revealed to emulate this ecological perspective in pursuit of greater industrial efficiency. By capturing and preserving the value of embodied energy and operational function in today’s complex products through forms of product reuse, firms can leverage these insights to create efficient business models and operational systems that support a more circular industrial economy. In this article, we introduce a systems perspective approach that combines economic and environmental assessment methods to explore how firms can gain competitive advantage by implementing circular product reuse, leveraging business strategy and Circular Economy policy laws. Using the consumer printing sector as a case study, we explore this possibility in the specific context of the structure-conduct-performance approach for tied markets (SCP-TM), demonstrating how by remanufacturing their own products, the original manufacturer (OM) may leverage extended producer responsibility (EPR) durable product take-back legislation (individual producer scheme) to maintain profitability, while providing environmental improvement in both printer and cartridge markets. We also illustrate how a durable product take-back requirement implemented as a collective scheme in the printer market, may result in decreased economic welfare in the tied inkjet cartridge market; a result of which policy makers may not be aware without considering the SCP-TM approach.