The Coordination Mechanism In Recycling And Remanufacturing With Irrational Characteristics

With the progress of human civilization, people’environmental consciousness gradually improve, and people have realized that the economic growth way based on resource consumption and environmental pollution will prevent the pursuit of high quality of life. Therefore, improving the efficiency of resource utilization and reducing environmental pollution had been the important direction of the economic development. In this context, the government had published a series of macroeconomic policies about circular economy to support the development of circular economy industry. And the renewable resources industry, as the core of circular economy industry, is of significance in relieving the shortage of resources and reducing environmental load pressure. The paper pays attention on waste materials recycling in resources regeneration and the core in our research is to discuss how to improve the efficiency of waste materials recycling through the coordination mechanism in recycling and remanufacturing industrial chain.For this purpose, the paper put forward some specific questions in view of "Regulations on Recycling and Disposal of Waste Electric and Electronic Products" enfored in2011:Whether the recyclers of waste electric and electronic products have motivation to provide a convenient recycling service for the users of waste electric and electronic products? How to motivate the recycers to make mor efforts in recycling when the recycers have some irrational characteristics? Why the government encourages the members in recycling and remanufacturing industrial chain to establish a long-term cooperation relationship? In order to solve the above questions, the paper refined the specific questions under irrational characteristics and put forward the following scientific issues to be resolved according to the hierarchical relationship:(1) Take the linear shared contract as example, how to design the coordinaton mechanism in recycling and remanufacturing in perfectly rational environment? Comparing with the traditional linear shared contract, how about the subsidy mechanism based on the linear shared contract?(2) How to design the coordinaton mechanism when the recyclers have fairness preference? How the fairness preference act on the the coordinaton mechanism and the effort level of recyclers?(3) How to design the coordination mechanism when the recyclers have different understanding on the fairness, which can be described as fairness sensitivity? And how the fairness sensitivity act on the coordination mechanism?(4) How to design the coordination mechanism when the remanufacturer has long-term consideration? How to explain the reasonableness for the coordination mechanism?Before sovling the above scientific issues, the paper demarcated the research object "recycling logistics" and analyzed its characteristics and process types; at the same time, the paper introduced the relevant theorial method and gave literature reviews to recycling logistics management from Operation management of end-of-life products, Reverse logistics management and Coordination and game in recycling and remanufacturing. Then the pape solved the above scientific issues one by one.Firstly, the paper studied how to improve the effort level of recycers through coordination mechanism in the reverse supply chain consisting of one remanufacturer and one recycler in a completely rational framework. In the study, we dicussed and compared the specific form of coordination mechanism respectively based on the traditional linear sharing contract and the improved linear sharing contract when the cost type information is symmetric or asymmetric. The study shows that: when the cost type information is symmetric, both the contracts can motivate recyclers to achieve the optimal level, but the improved linear sharing contract has better oprability; when the cost type information is asymmetric, the outcome of two contracts is the same while the improved linear sharing contract needs more conditions.Secondly, we discussed how the remanufacturer motivate recyclers pay mote efforts to recycle through incentive mechanism design when recyclers have fairness preference. To study it, we established two moral hazard models:one considerd a single recycler with fairness preference, the othe one considerd competing recyclers with fairness preference. The study shows that: when there is only one recycler, due to the risk-neutral characteristic, the optimal effort level can be carried out, even when the effort level is unobserved, and the existence of fairness preference only changes the franchise fee constituted by the remanufacturer, which decrease along with recyclers’increasing fairness emphasis; when there are two competing recyclers, the remanufacturer would give priority to eliminate the fair comparison between two recyclers by a subsidy contract based on total expected recycling quantity no matter that the effort level is observable or unobservable, and the existence of fairness preference can affect the optimal effort level and the contract structure.Thirdly, we discussed how the remanufacturer motivate recyclers pay more efforts to recycle when considering the different understanding of fairness based on the previous study. To study it, we established a moral hazard model with utility loss function about fairness preferences mixed with fair sensitivity. The study shows that: in the case of perfect information and given parameters, the remanufacturer just give a fixed fee to recyclers which decrease along with recyclers’ increasing fairness sensitivity, and the remanufacturer would adjust the fixed fee to ensure a disadvantageous fair state for recyclers no matter what kind of recyclers; in the case of imperfect information and given parameters, the remanufacturer would adjust the fixed fee to ensure a disadvantageous fair state for recyclers when recyclers have low fairness sensitivity and adjust the fixed fee to eliminate inequity when the fairness sensitivity is large enough.Finally, the paper discussed the coordination mechanisim in remanufacturers and recyclers’ long-term cooperation when they have the irrational characteristic about long-term consideration. To study it, we compared the relational contract and formal contract in the bilateral moral hazard model. The study shows that long-term consideration is the core for coordination using the optimal relational contract; we also demonstrated the system gains from the optimal relational contract is superior to the formal contract to explain the existence of this coordination mechanism.