On the cooperation of recycling operations |
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Authors: | Liang Lu Xiangtong Qi Zhixin Liu |
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Affiliation: | 1. School of Management & Languages, Heriot-Watt University, Edinburgh EH144AS, United Kingdom;2. Department of Industrial Engineering and Logistics Management, The Hong Kong University of Science and Technology, Clear Water Bay, Kowloon, Hong Kong;3. Department of Management Studies, College of Business, University of Michigan–Dearborn, 19000 Hubbard Drive, Dearborn, MI 48126-2638, United States |
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Abstract: | This paper addresses two important issues that may affect the operations efficiency in the recycling industry. First, the industry contains many small-scale and inefficient recycling firms, especially in developing countries. Second, the output from recycling a waste product often yields multiple recycled products that cannot all be sold efficiently by a single firm. To address these two issues, this paper examines how different firms can cooperate in their recycling and pricing decisions using cooperative game theory. Recycling operations under both joint and individual productions with different cost structures are considered. Decisions include the quantity of waste product to recycle and the price at which to sell each recycled product on each firm’s market. These decisions can be made jointly by multiple cooperating firms to maximize total profit. We design allocation schemes for maximized total profit to encourage cooperation among all firms. Managerial insights are provided from both environmental and economic perspectives. |
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Keywords: | Waste management Recycling operations Cooperative game Core |
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