Producer's choice of design-for-environment under environmental taxation
Journal
European Journal of Operational Research
Journal Volume
297
Journal Issue
2
Pages
532-544
Date Issued
2022
Author(s)
Abstract
Nowadays, the concept of Design for Environment (DfE) is getting more and more important and popular for sustainable operations. Observations from real-world practices and extant literature indicate that currently, companies do not have strong incentive to establish DfE. To this end, this paper proposes the use of an environmental tax to enhance DfE, which will contribute to reducing wastes from the origins, improving the environmental performance and maximizing the social welfare. In this paper, by building a stylized analytical model, we examine three forms of environmental taxes (linear tax, constant tax and zero tax) and evaluate how they affect the producer's optimal DfE level. We interestingly find that the ?onstant tax??does not encourage sustainable product design and the ?ero tax??is even better than the ?onstant tax?? On the contrary, the ?inear tax??can promote sustainable product design and can be regarded as the best. We further discover that the ?inear tax??can help balance the DfE level, the stakeholders??benefits and the social welfare performance. The leveraging effect of marginal DfE allowance in the ?inear tax??is surprisingly important and useful. Finally, we extend the basic model to cover four cases to check the robustness of the analytical results in the basic model and several important managerial insights for the development of sustainable product design are generated from the stakeholders and environment perspectives. ? 2021 Elsevier B.V.
Subjects
Environmental taxation; Manufacturing; Sustainability; Sustainable product design
Other Subjects
Ecodesign; Environmental management; Manufacture; Sustainable development; Taxation; Environmental performance; Environmental taxation; Environmental taxes; Optimal design; Performance; Real-world practice; Reducing waste; Social welfare; Sustainable operations; Sustainable product designs; Product design
Publisher
Elsevier B.V.
Type
journal article