Analysis On Recycling Modes Of End-of-life Vehicles Based On Extended Producer Responsibility

The automobile industry, one of the pillar industries in China, places a significantrole in the national economy. At present, China’s automobile industry is developingrapidly. A huge number of resources and energy consumption and the advent of thepeak of end-of-life vehicle liquidation will lead to issues concerning environment andcomprehensive utilization of waste resources, which poses as a great threat to thesustainable development of the automobile industry.The Chinese industries has gradually introduced Extended ProducerResponsibility (short for EPR) into the recycling of end-of-life vehicles by drawinglessons from the West who has implemented EPR widely and other successfulexperience in order to cope with the arrival of the peak of end-of-life vehicleliquidation, and thereby reduce the environmental pollution and effectively promotecomprehensive utilization of wastes as resources.This paper analyzes the recycling modes of end-of-life vehicles from theperspective of economics by holding EPR as its policy guidance, choosing end-of-lifevehicles as its research targets, and citing recycling modes as its research contents.Firstly, the study analyzes the functions of EPR in the recovery and treatment ofend-of-life products by utilizing the externality theory and discusses the rationalityand effectiveness of the internalization of the externality of end-of-life products, andinvestigates the negative externality and high value of the renewal of end-of-lifevehicles. Moreover, it proves that end-of-life vehicle is a type of end-of-life productsuitable for the EPR system by taking the characteristics of end-of-life products thatsuit for the EPR system into account. Secondly, it described the implementation ofEPR in the EU, the U.S. and Japan whose automobile industry are advanced and themanagement of the renewal of end-of-life vehicle are highly developed, there fromthe Chinese industries can draw merits to boost their own implementations. Thirdly, itanalyses the characteristics of three EPR-based modes: Manufacturer Take-back,Pooled Take-back and Third-party Take-back. Lastly, it conducts a quantitative studyof the maximum profit the production enterprises may achieve and its prerequisitesunder different recovery modes by constructing a decision-making model ofproducers, so as to identify the influencing factors in producing optimal profit and demonstrate the applicability of these three recycling modes. Furthermore, it revealsthe ways of selecting suitable recycling mode under different conditions, and providesa theoretical basis for China in selecting a suitable one.