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Analysing the effect of pricing and market instruments to increase uptake of material in secondary material markets

  • Published on December 21, 2020
This project aims to develop a framework and tool to capture the response of secondary material market dynamics with the introduction of pricing and market instruments. The tool developed provides a combination of market and pricing instruments to maximise the uptake of secondary materials by industries.
This project aims to develop a framework and tool to capture the response of secondary material market dynamics with the introduction of pricing and market instruments. The tool developed provides a combination of market and pricing instruments to maximise the uptake of secondary materials by industries. Methods The interactions between industry players and material markets in resource recovery value chains are simulated for virgin and recycled materials, to conduct dynamic modelling and visualise their response with the introduction of market and pricing instruments. The model reflects the following principles and techniques.  To account for the output and pricing level decisions of the industry players, discrete state space theory is used.  The supply and demand curves of both the markets are taken to be in quasi-static equilibrium.  To optimise the pricing instruments, pareto optimisation is used. This model can be customised and calibrated to any industry to operate similar to real world dynamics, once the industry structure and the value chain are identified. Outputs The outputs of the model are:  The optimal set of combinations of pricing instruments which satisfy multiple strategic goals of the government;  The corresponding response of markets in terms of where the respective market would attain equilibrium; and  the viability of industry players in both markets under optimal combination of pricing instruments to ensure industry continuity and survival. Outcomes With this model, the response of an industry to the introduction of alternative materials can be captured. Similarly, the strategic response of the industry to different policies and secondary material replacement strategies can be simulated. Such simulations would provide insights into the effectiveness of different market instruments, output level, and material replacement strategies to devise a holistic and cohesive response towards the increase of uptake of alternative material.
Project start date
21/12/2020
Project end date
21/12/2020

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