A game theory framework for cooperative management of refillable and disposable bottle lifecycles |
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| Institution: | 1. Center for Sustainable Systems, University of Michigan, Ann Arbor, MI 48109, USA;2. School of Civil Engineering, Purdue University, IN, USA;3. Institute for Environmental Science and Policy, University of Illinois, Chicago, IL, USA;4. Civil and Environmental Engineering, Clarkson University, Box 5712 Rowley Laboratories, Potsdam, NY 13699, USA;1. Louvain School of Management, Université Catholique de Louvain, Mons, Belgium;2. QuantOM, HEC Management School, University of Liege (ULg), Belgium;3. Mechanical Engineering, Industrial Management and Innovation Laboratory, Hassan Premier University, Ecole Centrale Casablanca, Morocco;1. School of Computer and Information Science, Southwest University, Chongqing 400715, China;2. School of Hanhong, Southwest University, Chongqing 400715, China;3. School of Electronics and Information Technology, Shanghai Jiao Tong University, Shanghai 200240, China;4. Department of Industrial and Systems Engineering, The Hong Kong Polytechnic University, Hong Kong, China;5. Institute of Business Intelligence and Knowledge Discovery, Guangdong University of Foreign Studies, Sun Yat-sen University, Guangzhou 510006, China;6. School of Engineering, University of British Columbia, 1137 Alumni Ave, Kelowna, BC V1V 1V7, Canada;7. School of Automation, Northwestern Polytechnical University, Xi’an, Shaanxi 710072, China;8. School of Engineering, Vanderbilt University, Nashville, TN 37235, USA;1. VMS Lab., Department of Industrial and Systems Engineering, KAIST, 335 Gwahak-ro, Yuseong-gu, Daejeon, 305-701, Republic of Korea;2. King Abdulaziz University, Jeddah, Saudi Arabia;1. Graduate School of Logistics, Incheon National University, Songdo-Dong, Yeonsu-Gu, Incheon 406-840, Korea;2. Carlo and Karin Giersch Endowed Chair “Business Management: Industrial Management”, Department of Law and Economics, Technische Universität Darmstadt, Hochschulstr. 1, 64289 Darmstadt, Germany;3. Advanced Logistics Research Team, Korea Railroad Research Institute, Railroad Museum road, Uiwang-Si, Gyeonnggi-Do 437-757, Korea;1. Sino-US Global Logistics Institute, Shanghai Jiao Tong University, Shanghai 200030, PR China;2. Industrial Logistics, Luleå University of Technology, 97187 Sweden;3. Department of Industrial Management, National Taiwan University of Science and Technology, Taipei, Taiwan R.O.C;4. School of Economics and Management, Fuzhou University, Fuzhou 350116, PR China;1. University of Bologna, Department of Industrial Engineering, Viale del Risorgimento 2, 40136 Bologna, Italy;2. University of Padova, Department of Management and Engineering, Stradella San Nicola 3, 36100 Vicenza, Italy;3. Curtin University, Sustainable Engineering Group, GPO Box U1987, Perth, WA, Australia |
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| Abstract: | Firms engaged in industrial ecology hope to reduce environmental impacts and costs, improve resource efficiency, and create symbiotic relationships that reduce transaction costs and enhance information flow. However, current LCA tools do not explain firms' incentives to implement the principles of industrial ecology, or how an individual or firm can affect the products and processes at other firms. Game theory, on the other hand, allows investigation of the willingness of producers and consumers to seek strategies that promote the common interest of the system while not harming their own interests. This paper applies game theory to the lifecycle of bottle packaging, and presents a framework for analysis of the choice between refillable and disposable bottles. Although refillable bottles may be more cost effective in the long run, bottlers only have incentive to use refillable bottles when they are sure that consumer return rates will be reasonably high. It has been found that consumers who keep or dispose of refillable bottles, or respond to deposit/refund return incentives by reducing their demand, may drive costs up and encourage adoption of disposables. A simple model is provided which finds the optimal bottler strategy as a function of the bottler's expectations for consumer cooperation. |
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