A Game-theoretic Model for Increasing “Producer Responsibility”: Refillables in the Packaging Market
Environmental policies in developed countries have taken tentative steps beyond the traditional focus on end-of-pipe or constraintbased waste disposal regulations, toward ‘extended responsibility’ for lifecycle impacts of manufactured goods. Current life cycle assessment tools used to assess the impacts of goods and services are not capable of describing the incentive structures that might explain the actions of different life-cycle players, thereby making truly extended responsibility policy difficult to implement. Game theory, on the other hand, allows investigation of policies that take into account the effects that stakeholders' environmental management decisions have on each other and the ways in which these interacting effects change the “playing field”, so that we more realistically look for policies that promote the interest of the system as a whole. This paper applies the concept of game theory to a comparative analysis of refillable and disposable packaging under an extended producer responsibility program. Despite the dominance of disposable bottles in the US marketplace, this study suggests that refillable bottles may be more cost effective in the long run, provided that consumer return rates remain high. We show that government policies for promoting more sustainable packaging alternatives must be focused on encouraging bottlerconsumer cooperation. This paper presents a simple model for testing the likely decisions of bottlers and consumers with and without government intervention, and finds that effective government strategies may include charging a packaging fee or tax at the point of production or enacting policies that reduce consumer cost of return, when the goal is to maximize an equitable distribution of benefits.