Understanding the Home Appliances Recycling System in Japan:

Institutions, Cooperation, and Competition

Abstract

This study aims to clarify how the competition mechanism works in the electric home appliances recycling system in Japan. The Law for the Recycling of Specified Kinds of Home Appliances (“Home Appliances Recycling Law”) , enforced in April 2001, promotes consumer disposal of end-of-life appliances properly by having retailers collect and deliver them to manufacturers, who recycle them according to their type (air conditioners, television sets, refrigerators, and washing machines). After 15 years, the system has significant achievements: the recycling rates have grown continuously and the recycling fees declined.

We consider a three-layered mechanism of cooperation and competition designed by seven major manufacturers. The first layer is the cooperation framework of the whole home appliances industry. The Association for Electric Home Appliances (AEHA) manages and distributes the recycling fees as a part of the institutional infrastructure. The second layer is two alliances of manufacturers (Groups A and B) and each alliance shares a nation-wide network of recycling plants. Due to their differing allying principles, Group A has a cost advantage, while Group B has advantage in recycling rates at the beginning. However, after the 15 years, both alliances are catching up with each other. The two alliances compete, and manufacturers cooperate with each other within the alliances.

The third layer is individual manufacturers, especially the seven major manufacturers, and each has several ways to incorporate their investment and expense for the recycling system into their own profit. In other words, for the manufacturers, the home appliance recycling is potentially a feasible business, which is also the core motivation for promoting the whole recycling system. Continuous R&D and facilities investment by each manufacturer drives the progress.