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The diffusion dynamics of the informal sector and sustainable WEEE supply chain

Chen, Yenming and Wu, Tien-Hua (2010): The diffusion dynamics of the informal sector and sustainable WEEE supply chain.

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Abstract

Literature indicates that the main obstacle to better manage existing WEEE recycling supply chain in the developing countries is lake of environmental laws and/or lax enforcement, particularly in control instruments to overcome the difficulty of informal e-waste processing firms and its supply chain. Policy makers may rely on new legislative framework to control environmental performance and the health impacts of pollution; however, this strategy is not clearly effective as the informal nature of this supply chain blocks the enforcement efforts and causes the high cost of monitoring. Hence, it is definitely crucial to understand the interaction between the environmental policy options and economic consideration when achieving the sustainability of operations across the WEEE supply chain. In this study, we propose the simplest form of epidemic spreading, namely a criss-cross epidemic model, and aim to examine the legislative stringency for observing the diffusion dynamics of informal and formal sectors in an e-waste recycling system. We find that a diffusion threshold does exist and it is related to the regulatory stringency. Effective population changes dramatically if it grows beyond this diffusion threshold. In particular, a government agency is able to layout a minimal regulatory stringency so that the participants of the informal sector diminish quickly and eventually cease while the economy remains unhurt. We use a simplified numerical study to test the proposed criss-cross epidemic model. Based on significant findings, this paper provides managerial implications for developing the new environmental legislative framework which is not only feasible but also beneficial to achieving the sustainable WEEE supply chain.

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