The Optimal Strategy of China’s Plastic Drinking Straws Ban Based on Consumer Heterogeneity and Retailer Competition

Abstract

The Chinese government has issued a new “Plastic Restriction Ban” requiring that, by the end of 2020, the food and beverage industry across the country bans the use of single-use, nondegradable plastic drinking straws. The governance of plastic drinking straws is a multi-dimensional and complex process. Therefore, based on the heterogeneity of consumers, this paper constructs a tripartite game model (the government, retailers, and consumers) for the governance of plastic drinking straws in China. Under this model, this research derives an optimal strategy in both monopoly and competitive markets, assuming the government has access to two policy tools, fines and subsidies. The research results suggest the following. (1) In monopoly markets, when (a) the fine or subsidy fee is high or (b) the fine or subsidy fee is low and the number of environment-conscious consumers is high, retailers are more inclined to provide biodegradable drinking straws. (2) Consumer heterogeneity has a certain impact on policy results; when there are enough environment-conscious consumers, policy costs can be reduced. (3) For high-quality products, the policy costs in competitive markets is lower than in monopoly markets; for low-quality products, the policy costs in competitive markets is higher than in monopoly markets. Based on the conclusions, this work suggests the government should focus on cultivating consumers’ environmental awareness and tighter control of products quality, in addition to the two policy tools, i.e., fines and subsidies, because these can reduce policy costs. Consumers should be aware of their own importance to China’s Plastic Drinking Straws Ban and adopt a refusal to accept plastic drinking straws and reduce the consumption of disposable plastics to support the policy. Retailers should also realize that proactively catering to consumer and government expectations can bring higher benefits to themselves; this can be achieved by providing high-quality biodegradable straws to support China’s Plastic Drinking Straws Ban. The model of this work could be applied to other corporate activities related to sustainability, such as plastic bags, plastic bottles, etc., and their connection to government policies.