- 期刊
A Model for Recycling Target Policy under Imperfect Competition with and without Cooperation between Firms
摘要
This paper developed a general theoretical model that describes production and recycling in an n-firm oligopoly market where firms can cooperate for recycling. We used a three-stage game to analyze a specific recycling issue. In stage 0, the government sets a target recycling rate and virgin material and final disposal tax rates. In stage 1, n identical firms simultaneously invest to reduce the cost of recycling given the recycling target. We treated this activity as a type of R&D. Furthermore, we considered three kinds of R&D activities depending on what firms maximize in stage 1, namely, industry-wide cooperation and noncooperation. In stage 2, firms engage in a Cournot competition. Surprisingly, positive virgin material taxes or positive final disposal taxes discourage firms from engaging in recycling R&D efforts in normal situations, regardless of whether R&D cooperation takes place. We compared the second-best social welfare levels under the two regimes described earlier. From a welfare perspective, we found that noncooperation is inferior to industry-wide cooperation.