Pricing Decisions in Construction and Demolition Waste Recycling Supply Chains under Carbon Tax Scenarios

Abstract

Pricing decisions for construction and demolition waste recycling are severely hampered by consumer uncertainty in assessing the value of recycled building materials. This paper uses a construction and demolition waste (CDW) recycling utilization model that consists of a building materials manufacturer and a building materials remanufacturer and compares both the prices and the profits under different carbon tax scenarios, i.e., consumer risk-averse and risk-neutral scenarios. The main conclusions are as follows. (1) The optimal price of traditional products is always negatively correlated with consumer risk aversion. Unlike traditional products, the optimal price of recycled building materials is negatively related to the degree of consumer risk aversion in the case of a low carbon tax; the opposite conclusion is obtained in the case of a high carbon tax. (2) When the abatement cost coefficient is below the threshold and the carbon tax is low, the profits of the building materials manufacturer and remanufacturer show a U-shaped trend with consumer risk aversion; in the case of a high carbon tax, the profits of the two enterprises are positively correlated with consumer risk aversion. In addition, when the abatement cost coefficient is above the threshold, there is an interval in which the profits of the building materials manufacturer are positively correlated with consumer risk aversion in the case in which the carbon tax satisfies this interval. In all the other cases, there is a U-shaped trend in profits and consumer risk aversion levels for both the building materials manufacturer and the remanufacturer.

Keywords

• carbon tax
• consumer risk aversion
• consumption value theory
• pricing decision