Game Analysis of Government Subsidy Mechanism for WEEE Recycling in China

Abstract

Electrical and electronic equipment closed-loop supply chains consisting of manufacturers, sellers, and consumers under government regulation was investigated in this paper. Based on Cobweb theorem, we analyzed the repeated game process between government and manufacturers, and obtained the equilibrium solution for stage game. On this basis, we discussed the impact of government subsidy for WEEE recycling on social welfare, as well as the mutual response strategies of manufacturers and government. By the results of our study, we have discovered that, if manufacturers recycle WEEE with the possible maximum recycling rate attained without loss of own revenue after receiving government subsidies, it will cause the loss of social welfare, and that the degree of loss will increase with the increase of unit subsidy for recycling WEEE.