Pay-as-you-throw versus recycling fund system in closed-loop supply chains with alliance recycling

This paper develops closed-loop supply chain models with alliance recycling under two financing systems for recycling used products, that is, pay-as-you-throw (PAYT) and recycling fund (RF). The primary goal behind analytic formulation is to investigate the differences between the two financing systems and determine which one performs better, and to examine the impact of target recycling rate and competition between recycling alliances (RAs) on channel decisions. We find that the PAYT system is always more beneficial to customers and the retailer, while the RF system increases the social welfare. If there is no competition between RAs, which system performs better for the RA depends on the baseline of subsidy fee, while which system performs better for manufacturers depends on their shares. However, if there is competition between RAs, the RF system is favored by the disadvantaged RA. Moreover, the restriction on target recycling rate has an effect on channel decisions.