Fair cost allocation mechanisms in electronic waste collection and recycling networks

Abstract

The collection and recycling of electronic waste (e-waste) has become one of the key issues in environmental protection, and many state-operated programs have been launched to mandate the recycling of e-waste state-wide in the US. The costs incurred under the state-run operations are allocated to manufacturers according to collective Extended Producer Responsibility (EPR) legislation which is widely adopted in e-waste programs. In this paper, we study the problem of allocating cost among manufacturers in a fair manner, which is essential for maintaining an efficient and stable state-operated program. We introduce a new cooperative game model where sub-coalitions can access external resources that are not owned by their members at predesigned unit prices. It is indicated in (Kalai and Zemel 1982) that the existence of external resources accessible to sub-coalitions may lead to an empty core of the resulting game and thus undermines the stability of a collaborative system. Our result shows that by proper pricing mechanisms of the external resources that are centrally controlled, such potential negative impacts on the coalition stability can be eliminated and a fair cost allocation is guaranteed to exist.