How to motivate the producers' green innovation in WEEE recycling in China? - An analysis based on evolutionary game theory.

In an effort to regulate waste electrical and electronic equipment (WEEE) recycling, the Chinese government has issued China-WEEE regulations and a fund policy. In accordance with the 2012 fund policy, the government collects funds from producers and subsidizes recycling enterprises. However, this policy has encountered difficulties. The 2016 White Paper on WEEE Recycling, Treatment and Reuse states that while the funds collected from producers were 2.61 billion Yuan, the subsidies provided to recycling enterprises were 4.714 billion Yuan, which is a gap of 2.104 billion Yuan. In addition, this policy did not incentivize producers to invest in WEEE recycling. Our paper aims to answering the following questions: (1) What is the impact of the current WEEE processing fund policy? (2) How can producers' green innovation in WEEE recycling be promoted? We use evolutionary game theory to investigate the strategies used by producers and recyclers and explore their evolutionary behaviors under two policies: the 2012 fund policy (the current policy) and the Fund Relief Policy (a newly designed policy). The results indicate that the Fund Relief Policy can motivate producers' green innovation behavior, improve the profitability of recyclers, and alleviate the financial pressure on government to a certain extent.