E-waste reduced by fees at time of purchase, says new INFORMS Management Insights

March 25, 2009

The large amount of waste that follows the sale of computers and electronics is reduced when states charge consumers a fee at the time of sale, according to the Management Insights feature in the current issue of Management Science, the flagship journal of the Institute for Operations Research and the Management Sciences (INFORMS®).

Management Insights, a regular feature of the journal, is a digest of important research in business, management, operations research, and management science. It appears in every issue of the monthly journal.

"Effects of E-Waste Regulation on New Product Introduction" is by Erica Plambeck of the Graduate School of Business at Stanford University and Qiong Wang of Alcatel-Lucent Bell Laboratories.

The fast pace of new product introduction in the electronics industry imposes high costs on manufacturers and the environment as consumers each year discard millions of tons of obsolete electronics containing toxic materials, by one estimate, more than one million tons of e-waste in the United States alone.

The authors study two kinds of e-waste regulations designed to help manage this challenge: fees-upon-sale and fees-upon-disposal.

The California Advanced Recovery Fee collects fees at sale time from consumers for items like laptop computers, monitors, and televisions and uses those fees to pay for collection and recycling.

Based on their model of competition in the electronics industry, the authors find that fees-upon-sale induce manufacturers to introduce products less frequently and, consequently, the quantity of e-waste decreases dramatically - and manufacturers' profits may actually increase. In contrast, fees-upon-disposal reduce manufacturers' profits and fail to reduce the quantity of e-waste.

Since industry resistance has been a primary barrier to U.S. federal regulation of e-waste, the authors recommend fees-upon-sale as a politically feasible means to reduce the environmental impact of e-waste.

The current issue of Management Insights is available at http://mansci.journal.informs.org/cgi/reprint/55/3/iv. The full papers associated with the Insights are available to Management Science subscribers. Individual papers can be purchased at http://institutions.informs.org. Additional issues of Management Insights can be accessed at URL http://www.informs.org/site/ManSci/index.php?c=11&kat=Management+Insights.

The other Insights in the current issue are:

INFORMS journals are strongly cited in Journal Citation Reports, an industry source. In the JCR subject category "operations research and management science," Management Science ranked in the top 10 along with two other INFORMS journals.

The special MBA issue published by BusinessWeek includes Management Science and three other INFORMS journals in its list of 20 top academic journals that are used to evaluate business school programs. Financial Times includes Management Science and four other INFORMS journals in its list of academic journals used to evaluate MBA programs.

The Institute for Operations Research and the Management Sciences (INFORMS®) is an international scientific society with 10,000 members, including Nobel Prize laureates, dedicated to applying scientific methods to help improve decision-making, management, and operations. Members of INFORMS work in business, government, and academia. They are represented in fields as diverse as airlines, health care, law enforcement, the military, financial engineering, and telecommunications. The INFORMS website is www.informs.org. More information about operations research is at www.scienceofbetter.org.

Institute for Operations Research and the Management Sciences

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