The Impact of Reward–Penalty Policy on Different Recycling Modes of Recyclable Resources in Residential Waste

Facing enormous pressure from the rapid growth of waste on the environment and society, many developed countries have combined urban waste recycling systems with waste classification to reduce pollution and recycle resources. However, this technique is not well established in developing countries. From the 2000s, China has carried out many waste classification recycling projects in many pilot cities although they have yet to reach widespread success. This paper focuses on China’s Newest Waste Classification Recycling Project (NWCRP), which was first implemented in Shanghai from 2019 and has a three-echelon supply chain containing waste classification guiders (WCGs), recyclers and demanders. Firstly, two recycling modes in NWCRP are studied: the recyclers of the first mode are dominated by the recycling company (mode RC), and the recyclers of the second mode are dominated by the environmental sanitation engineering group (mode ESEG). Secondly, a reward–penalty policy is proposed, which can be implemented for WCGs or different recyclers in the two modes (RC or ESEG), and the impacts of different scenarios are also compared. The results showed that (1) with increasing reward–penalty intensity, the sorting rate and the profit show upward trends in two modes, while the subsidy efficiency of government decreases; (2) when the reward–penalty policy is implemented for WCGs, the recyclers’ recycling price decreases in the two modes; (3) all scenarios that implement the reward–penalty policy in mode RC have certain advantages in the sorting rate and profit and (4) with increasing reward–penalty intensity and target sorting rate in the reward–penalty policy, the social welfare first increases and then decreases in all scenarios. Finally, some suggestions on the recycling mode and the reward–penalty policy for establishing a 3RW recycling system are provided