groupe de recherche en economie théorique et appliquée – umr cnrs 5113 an evolutionary modelling...

Groupe de Recherche en Economie Théorique et appliquée – UMR CNRS 5113

An evolutionary modelling of recycling and product-life

extension

EMAEE 2007 Globalisation, Services and Innovation:

The Changing Dynamics of the Knowledge Economy

17 – 19 May 2007

Eric [email protected]

GREThA UMR CNRS 5113 Montesquieu - Bordeaux IV University, France


Plan

• Outline of the context

• Model description

• Simulations results

• Conclusions


Evolution of waste streams

• In the OECD countries, domestic waste streams have increased by 40% in volume between 1980 and 1997.

• In France, the emission of domestic waste per person actually doubled between 1960 and 1995. Growth rate in French domestic waste emissions has been about 2,5% par year for decades.


Closing the “material loop”

• Short loops = product-life extension by means of re-using products as well as by maintenance, repair, reconditioning and technological upgrading (ex: retreading of tyres, the Xerox life-cycle design programme for photocopiers, the Siemens-Albis AG portable operating system BS2000, etc.)

• Long loops = post-consumption recycling : collecting waste, sorting it to recover materials which may be recycled, and then transforming these materials (physically and/or chemically) to obtain new raw

materials.


Closing the “material loop”

• Short loops are much more complex to implement than long ones.

• product-life extension => slow down product replacement speed by consumers => lower sales.

• product life extension => slow down technical progress.

Firms are usually reluctant to adopt a product-life extension strategy. The tendency is rather to see a decrease in product-lifetime. Firms tend mainly to concentrate more on recyclability.


Issues studied

• Investigate firm's economic incentives to extend product life and market recyclable products.

• Identify the conditions favouring diffusion of products with a low environmental impact: easily recyclable products with a long lifetime (green products).

• study the impact of such diffusion on waste management and ecological variables.


Model structure

• Model based on the "History-friendly" model by Malerba, Nelson, Orsenigo and Winter (1999).

• Focus on the environmental dimension of the product => introduction of the post-consumption phase.


Model structure

R&D investment

Innovation process

Product’s characteristics

Visibility Purchase process

Quantities sold

Profit

Consumer’s product

LT R End of life product

Total recycled inputs supply

Recycled and virgin inputs

demand

Minimum Price

(pmin)


Product’s characteristics

Lifetime (LT).

Rmax1

LTmax1

Rmax2

LTmax2

Recyclability (R)

Design for recycling

Initial designLong lifetime

design backed up

with services

Long lifetime design

backed up with services

Design for recycling


Firms’ R&D investment

1,, . tiitiRD with 0 ≤ μi ≤ 1.

tiiLTti RDRD ,, .

tiiRti RDRD ,, .1

with 0 ≤ δ i ≤ 1


The innovation process

RtiRD

Rtiob

,4expPr

32

1,

LTtiRD

LTtiob

,4expPr

32

1,

21

1,,, Rmax. tiRtiRti RRDR

with Rmax = Rmax1 if Ri,t-1 ≤ Rmax1 and Rmax = Rmax2 if Ri,t-1 > Rmax1.

21

1,,, LTmax. tiLTtiLTti LTRDLT

with LTmax = LTmax1 if LTi,t-1 ≤ LTmax1 and LTmax = LTmax2 if LTi,t-1 > LTmax1.

Innovation probabilities


Supply - demand interactions

4

3

21

1,,

,,, .1

..

ti

titititi S

pRLTV

Product’s visibility

Non-green consumers : β3 β1 + β2

Green consumers : β3 < β1 + β2


Product manufacturing

• two categories of perfectly substitutable inputs: recycled inputs and virgin inputs

• Share of recycled inputs = parameter

• Recycled inputs provided by the recycler, virgin inputs by suppliers external to the model


Selling price

1.min ,, titi pp

If LTi,t ≤ LTmax1

1,

1,1,1,,

..min

ti

dti

dti

titi Q

qvpvqrprCMp

If LTi,t > LTmax1 tititi AddCCMp ,1,, 1.min

1,, . tiAddCti AddCAddC

tititititi QpQp ,,,,, .min.


The recycler

• The recycler collects the complete range of end of life products which he recycles and sells to the producers as recycled inputs

• Starting from a unit of product, the recycler recycles, manufactures and sells R units of recycled inputs


Experimental set-up

• LSD 5.5 simulation platform

• 10 firms, 1000 consumers and 1 recycler

• neither entries nor exits of firms and consumers

• Monte-Carlo method : 10 000 simulations. The number of periods is

randomly chosen between 1 and 200. The results of the last period

of each simulation are studied. Simulations initialized with a

randomly drawn vector of values for the main parameters

=> 10 000 observations covering quite a diversified subset of the

parameter space


Firm level results

Determinants of market shares in terms of users


Firm level results

0

1

2

3

4

5

6

Lifetime

Life

time (LT

)

Delta - Demand

0.2

0.4

0.6

0.8

1.0

Recyclability

Re

cycl

ab

ility

(R

)

Delta - Demand


Market level results

Determinants of product quantities sold



Determinants of recycled waste flows



0

100

200

300

400

500

600

700

800

Virgin

inputs

flow

s

Supply - Demand

Box plots of virgin inputs flows


Conclusions

• Very simple model

• New model under development with

- an explicit technological dimension;

- adaptive firms’ innovation strategies;

- new design => adoption costs;

- exit of firms;

- innovation activities of the downstream actors in the

supply chain;

- environmental regulations (extended producer

responsability).

groupe de recherche en economie théorique et appliquée – umr cnrs 5113 an evolutionary modelling...

Documents