Study On The Effectiveness And Incentive Mechanism Of EPR Policies Based On The Perspective Of Industrial Chain

Extended Producer Responsibility (EPR), integrating some advanced solid waste management ideas (e.g. source reduction, preference for prevention, product life circle), has become one of the most important institutional innovations in global environmental fields in recent20years. EPR is not only extending rapidly in the European Union, Japan, the United States of America and other developed countries, but also increasingly takes seriously attention in some developing countries, including China. EPR policy primarily aims for the responsibilities for solid waste disposal. It requires the producers to undertake the liabilities of recycling or discarding their products which are out of use. In the implementation process, EPR is mainly expressed as waste recycling, a management issue at the last stage of product life cycle, but its essence is to influence upstream producer’s R&D decision by reassigning waste disposal responsibility. Theoretically, a rational producer has motivation to change R&D decision to reduce the end processing cost, if it is required to be responsible for the environmental impact of its product life cycle. Therefore, waste disposal responsibility to the producer can be regarded as an incentive mechanism which attempts to carry out environmental constraint to control waste generation in the initial design stage of product life cycle.EPR, therefore, can be treated as a policy principle. In other words, EPR aims at changing upstream agent’s design decisions by the implementation of some preventative environmental policies, which motivates the downstream agent of product life cycle. However, the key problems include:What kinds of policy tools can be employed to achieve the above purpose? What characteristics do these policy tools possess and what are their applicable conditions? Which policy tools can motivate the upstream design decisions to realize the social optimal? The first two questions refer to the incentive mechanism of EPR policies, and the last one is about the effectiveness of EPR. From this point of view, effectiveness and incentive mechanism of EPR policies are closely linked and become the key issues set before EPR policy research. To solve these two issues, this thesis develops mathematical models in the framework of product life cycle, based on the activity analysis of the agents and their vertical relationship on the industrial chain. This thesis completes the research work in the following aspects:(1) Based on the related literature in economics and management, the essential connotation, the impact on producer’s behavior, the incentive result and effectiveness and the cost of implementation of EPR are summarized. Then, this study explores how to improve ongoing research about incentive mechanism and effectiveness of EPR policy and puts forward the research direction and objective of this thesis.(2) Based on the analysis of incentive principle and behavior of agents on the industrial chain, this study proposes the basic logic and method, from the perspective of industrial chain, to study the incentive mechanism and effectiveness of EPR policies. And then a framework to study above issues is built.(3) The realizing condition and the main influential factors of optimal regulation standard in EPR are proved. The ineffectiveness of standard regulation is demonstrated. Furthermore, the method to recover the effectiveness of regulation policy by combining regulation policy with economic policy is explored.(4) By employing a two-stage dynamic game model, the effective implementation condition of EPR regulation policy is investigated. The factors, such as incentive strength, social benefits, regulation cost, public environmental awareness, are discussed to understand how they can affect the effective implementation of EPR regulation policy.(5) Applicable conditions and relationship of different EPR policy tools are investigated. Depending on mathematical model, the incentive strength and applicable condition of several policy tools, including Pigovian Tax, deposit-refund, input-output tax substitution and standard regulation, are studied.(6) How vertical transaction mode can impact incentive effects of EPR policy is discussed. By comparing the producer’s profit difference among different vertical transaction modes, the impact of transaction mode on incentive effects of EPR policy is researched. Moreover, the impact of EPR policy parameters on producer’s design decision is considered under different vertical transaction modes.