Sustainable municipal solid waste disposal supply chain analysis under price-sensitive demand: A game theory approach

Abstract

The impacts of price and sustainability on municipal waste disposal demand have largely been ignored by waste management researchers. This paper considers a waste disposal supply chain that includes a disposal facility and a contractor. Both parties try to improve source sorting for waste collection to reduce the recycling cost at the disposal facility. Improving source sorting requires investment that would increase the price of the waste disposal service, thereby affecting the price-sensitive demand. The relationship between the service price and investments in waste sorting motives is analyzed in this paper via studying the trade-off between the optimal source sorting and the waste disposal service prices. Different scenarios based on the various players’ power structures are developed. Nash and Stackelberg games have been applied in order to find the optimal decision values in each scenario. The impact of cost sharing on optimal supply chain decisions is also studied. The numerical results show that the waste supply chain is more profitable when it is working under an integrated management structure. Moreover, reducing the required investment motivates supply chain players to select higher levels of waste sorting at the source. A numerical example is provided, followed by some managerial insights.