Research on Investment Decision of Construction and Demolition Waste Recycling Technology from the Perspective of Government Subsidy

Abstract

To achieve more efficient recycling management of construction and demolition waste (C&D waste) and to encourage investment in recycling enterprise technology in underdeveloped areas, this study develops a dynamic Nash supply chain model, with and without government subsidy, for a C&D waste recycling treatment system comprised of two recycling enterprises and one builder. We investigate the mechanism of government subsidy regulation on recycling enterprises’ technology decisions, the optimal proportion of technology upgrades of recycling enterprises, and the effects of other exogenous factors on the decision of government and recycling enterprises in an early stage of the recycling industry. The results show that with the subsidy, the recycling enterprises’ proportion of technology upgrade and profits is always improved. And recycling enterprise will actively increase investment to increase the proportion of technology upgrades. Furthermore, the government should prioritize assisting enterprises that are among the first to invest in recycling technology. Interestingly, the proportion of subsidy and technology upgrades is also affected by the unit environmental benefit and the degree of substitution of renewable products with different technological levels. When the degree of substitution is low, not only government subsidies are required to play a role but also builders’ awareness of the benefits of using high-tech renewable products, in order to drive enterprise technology investment from the demand side. The study provides detailed information on government and recycling enterprise C&D waste recycling strategies.