Research On The Enterprises’ Relationship Within Industrial Waste Recycling Business Network

In China, with environmental issues have become increasingly prominent, and the economy is currently in a critical period of transition, the concept of circular economy is increasingly mentioned, meanwhile building the eco-industrial park across the country is also in the ascendant. Most of these efforts have involved the recycling of industrial waste, and this is general appeared with the form of a network recycling tissue, which is called industrial waste recycling network. In this network, the industrial waste generated from upstream enterprises production activities will be used by the downstream enterprises business as some kind of raw materials. Therefore, this paper researching the industrial waste recycling network will focus on the vertical relationships within upstream and downstream enterprises in the industry chain. Depending on the type of vertical relationship, first we proposed reasonable assumptions, then built the corresponding revenue models, and finally draw on the results of the general equilibrium between the upstream and downstream enterprises on prices, output, profits and other business vertical relationships.Research ideas of this paper is to make a descriptive introduce in the first three chapters, including research background, purpose and meaning, industrial waste recycling network concepts, characteristics, formation causes, types and industrial waste recycling network vertical business relationships. Through these descriptions we can have a comprehensive understanding to the industrial waste recycling network. Subsequent sections is the core of this paper, we divided industrial waste recycling network enterprise vertical relationships into four categories, namely, one upstream enterprise to one downstream enterprise, one-to-many, many-to-one, and many-to-many relationships. Depending on the characteristics of first three categories we made reasonable assumptions about production costs and sales prices, industrial waste units sewage charges and recycling subsidies,etc, and then built revenue model based on the target to maximize their profits, using game theory and differential calculus will be able to derive the final balanced game result, including variables such as the production of upstream and downstream enterprises, industrial waste price and final income. And we made simple qualitative analysis for the fourth category. Meanwhile, this paper also expanded the assumption of homogeneity of enterprises in the upstream or downstream, to the possible expansion of the non-homogeneous case among enterprises, such as different production costs, asymmetric information, etc, making the research more realistic. By getting the balanced game results of each model, we can have a comprehensive understanding of the vertical relationship for recycling industrial waste in the enterprise network with this paper, meanwhile be able to master practical range of industrial waste sewage charges and recycling subsidies, providing theory basis for the government to develop appropriate policy. Subsequently, the paper analyzed the industrial waste recycling network enterprise vertical relationship strategies, discussed selection problems in the corporate strategy of vertical relationships in industrial waste recycling network, including vertical disintegration strategy, vertical integration strategy, vertical restraints strategy and vertical expansion strategy. And elaborated and analyzed these four strategies from motives of policy enforcement and policy effects of the implementation. The final chapter of this paper gave a brief summary and proposed inadequacies of this article and future research directions.