Cooperation dilemmas in construction and demolition waste recycling: From understanding to navigating

Abstract

High-quality recycling is considered the optimal practice for managing the significant volume of construction and demolition waste (C&DW). However, the lack of coordinated cooperation among stakeholders poses challenges in sustaining and advancing the recycling supply chain. However, the previous research on the decision-making of partnerships among companies is limited despite its importance. Hence, our research framework seeks to address the gap, unfolding from understanding to navigating. Initially, to understand the status quo, we model a partnership decision game where companies face a choice: either commit to in-depth cooperation benefiting from coordination contracts, or opt for surface-level cooperation via straightforward wholesale transactions. Our findings reveal the transfer effect that relation-specific investments of low-power companies may undermine the vested interests of high-power companies, which leads to a prisoner's dilemma dominated by surface-level cooperation. Subsequently, we propose two remedies, a subsidy scheme and a policy of strategic information revelation, to address the dilemma. Specifically, we suggest a Cooperation Subsidy to motivate the remanufacturer and the collector to choose in-depth cooperation, which proves more efficient than conventional economic regulations. Moreover, we design a signal structure based on Bayesian Persuasion to persuade the remanufacturer to opt for in-depth cooperation. This study seeks to provide theoretical support for government policy development.