Contract vs. recruitment: Integrating an informal waste merchant to a formal collector for collection of municipal solid waste

Due to environmental and social issues caused by unauthorized processing of recyclables, waste merchants, key informal collectors with the door-step collection in China have been integrated into formal collectors. However, how to achieve effective integration is still underexamined. This study puts forward two strategies for integrating a waste merchant from a formal collector's perspective, namely, contract strategy (CS) and recruitment strategy (RS). A leader-follower game model is developed to explore and compare the suggested integration strategies considering the minimum profit constraint of a waste merchant. On this basis, the feasible boundary for the selection of a reasonable strategy by the formal collector is identified. The results show that the formal collector remains reluctant to integrate the waste merchant through RS or CS if the created value by the recyclables is low. The likelihood of selecting RS increases with the higher reclaimed value. Reduced hassle costs for residents can expand the boundary of selection for RS. Besides, it is observed that CS has a greater chance when the ratio of the collection cost coefficient under RS to CS increases. In particular situations, the formal collector may gain a higher profit using RS, although it may not definitely result in higher collection quantity compared to the situations where CS is applied. Overall, this study provides insights for formal collectors for the selection of an effective integration strategy. (C) 2020 Elsevier Ltd. All rights reserved.