Green Recycling Networks

One of the biggest obstacles to recycling consumer goods is the high cost of material separation. The recovered value from recycling increases as the disassembly of the discarded product is easier. For example, recovery of high-value reusable components from a car, television set or cell phone may be too labor-intensive, making recycling companies forgo that option and simply “grind the product” to recover less valuable raw materials such as steel, precious metals or plastic instead of more valuable components. At the same time, competitive pressures force firms to differentiate their products when competing for consumers. Such differentiation is accrued through, e.g., product design and material selection choices that are different from competitors. Product differentiation leads thus to waste streams that are more diverse in terms of aggregate material stream composition, which is much more difficult to separate and, hence, increases the recycling costs. One approach would be to recycle products at the level where they are more homogeneous, i.e., at the firm level. The second big obstacle to recycling are economies of scale. Significant set-up costs are often required to set a recycling infrastructure (e.g., to set up collection sites, to certify the processes of participating recyclers, to administer financial flows between consumers, manufacturers and recyclers, ...). Therefore, when firms compete with differentiated products, they may not have enough volume to make recycling break even. It is then natural that intermediate structures have been proposed: keeping the material flows as homogeneous as possible (the firm level), in order to keep (variable) separation costs low, and yet keeping the volumes high enough to leverage economies of scale. This can be achieved via “recycling coalitions”. As historically governments bore the brunt of the disposal costs, they have been active in proposing new structures in order to reduce their financial burden and to have companies be responsible for the proper disposal of the products they bring to the market.