Mar. 26, 2009 The large amount of waste that follows the sale of computers and electronics is reduced when states charge consumers a fee at the time of sale, according to the Management Insights feature in the current issue of Management Science, the flagship journal of the Institute for Operations Research and the Management Sciences (INFORMS®).
Management Insights, a regular feature of the journal, is a digest of important research in business, management, operations research, and management science. It appears in every issue of the monthly journal.
“Effects of E-Waste Regulation on New Product Introduction” is by Erica Plambeck of the Graduate School of Business at Stanford University and Qiong Wang of Alcatel-Lucent Bell Laboratories.
The fast pace of new product introduction in the electronics industry imposes high costs on manufacturers and the environment as consumers each year discard millions of tons of obsolete electronics containing toxic materials, by one estimate, more than one million tons of e-waste in the United States alone.
The authors study two kinds of e-waste regulations designed to help manage this challenge: fees-upon-sale and fees-upon-disposal.
The California Advanced Recovery Fee collects fees at sale time from consumers for items like laptop computers, monitors, and televisions and uses those fees to pay for collection and recycling.
Based on their model of competition in the electronics industry, the authors find that fees-upon-sale induce manufacturers to introduce products less frequently and, consequently, the quantity of e-waste decreases dramatically – and manufacturers’ profits may actually increase. In contrast, fees-upon-disposal reduce manufacturers’ profits and fail to reduce the quantity of e-waste.
Since industry resistance has been a primary barrier to U.S. federal regulation of e-waste, the authors recommend fees-upon-sale as a politically feasible means to reduce the environmental impact of e-waste.
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The above story is based on materials provided by Institute for Operations Research and the Management Sciences.
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- Erica Plambeck, Qiong Wang. Effects of E-Waste Regulation on New Product Introduction. Management Science, 2009; 55 (3): 333 DOI: 10.1287/mnsc.1080.0970
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