The impact of subsidy and preferential tax policies on mobile phone recycling: A system dynamics model analysis

This paper analyzes the impact of possible subsidy and preferential tax policies on mobile phone (MP) recycling industries in China using system dynamics methodology, aiming to offer a reference for the construction of a reasonable policy system for MP recycling. First, different subsidy and preferential tax policies were introduced to establish a system dynamics model. Then the impact of policies proposed on MP recycling industries was analyzed using the model. The results showed that: (1) newly discarded MPs could be completely recycled annually if recyclers could achieve a RMB10 recycling subsidy for each MP formally recycled; (2) an initial subsidy policy can effectively increase the number of remanufacturers, but is harmful to remanufacturing ca-pacity; (3) stage R&D subsidy policy outperforms equalization R&D subsidy policy. Additionally, more subsidies allocated to remanufactures means more profit when R&D subsidy is limited; (4) more tax benefits provide more output and profit. Remanufacturers are more sensitive to tax benefits than recovery enterprises in the short run. Finally, several suggestions related to the construction of MP recycling policy systems were put forward based on evaluation results.