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The results of Proposition 1 and 2 have specifically answered the research questions
listed in Section 1. If the tax and subsidy instrument (8) are implemented, eco-friendly
manufacturers will be more willing to increase its production quantity and more dedicated
EDMS facilities will be established. With the proper internalization of externality, containing
less EDRMs will be punished in the production cost and, therefore, the optimal production
quantity will decrease. Proposition 3 confirms that the common tax-subsidy policy
instrument can improve chain members’ profits and therefore can help to promote the
collecting and processing of EDRM.
Regarding to recycling a material or digesting a pile of waste, there is a conflict goal. A
real-world example of a multiplayer problem in enacting environmental policy is
demonstrated for the effectiveness of the proposed policy instrument. Recently, the plastic
material Polylactide (PLA) is getting popular because of its biodegradable property (Vink,
Rábago, Glassner, and Gruber, 2003). We know that, subject to the limited ability and
financial driver of collecting logistics, not all end-of-life products can be perfectly handled.
The industry wants to invent a material that can be reused for many times if it has been
collected but it should be bio-degenerated if it has been disposed. Unfortunately, there is no
single material having both advantages. Even more unfortunately, these two materials are not
mixable in the recycling process. Polyethylene terephthalate (PET) recyclers do not welcome
the use of PLA as general public does because a slight contamination of PLA into recycled
PET will cause the entire materials unusable (Madival, Auras, Singh, and Narayan, 2009).
Few facilities can receive profit from handling this kind of material. The ought-to-be
environmentally friendly superstar becomes today’s EDRM. Fortunately, a simple tax-
subsidy can put momentum into the collection system. Many governments, such as Germany,
France, Korea, Italy, and Taiwan, have established tax-subsidy regulation to encourage the
collection and processing of biodegradable plastics (Jem, van der Pol, and de Vos, 2010).
5. Numerical Example
Consider the practice of PVC plastics recycling and material usage (Lenntech, 2014).
The reuse technology of this material has been confirmed by industries both in the chemical
process of refinery and the mechanism process of injection molding (Gordon, 2010).
Molding in general is deemed highly experimental. Most recipes for injection molding are
usually designed for a particular ingredient and percentage of plastics and additives. Mixing
recycled and virgin PVC is possible but the shaping mold has to be specially designed and
fine-tuned for a particular recipe. Because the expensive equipment, machines, and devices