Question

In: Economics

Consider the costs and benefits to producers of food products of voluntarily moving away from plastic...

Consider the costs and benefits to producers of food products of voluntarily moving away from plastic packaging in response to consumer demand. Discuss the strategic factors producers may consider.

(Requires discussion of producers’ incentives and strategic considerations.)

(Requires discussion of nash equilibrium/ dominant strategy)

(The previous question was on government intervention so this question is regarding a company voluntarily moving away from plastic packaging as an alternative to government intervention)

Solutions

Expert Solution

Following are the strategic factors producers may consider for voluntary moving away from plastic packaging:

a. Use of alternative packaging like

1. Paper bags: Though its little costly but based on its quality, quantity and customization it won't cost more than few penny per piece and can be used repeatedly also and it also adhere to government rules as well.

2. Non woven bags: Although it is made of plastic only, government has approved it with 40 GSM and above. It is a quiet cheaper solution to paper bags.

3. Cutleries and meal trays made of corn starch and pine boat are very durable and cheaper. Along with being eco friendly it takes good care of the food packed inside.

b. Consumers' reliability: Packing foods in plastic or having anything hot and spicy in plastic vessels is not that healthy as we all know. Therefore if producers are using the other alternatives as mentioned above then it'll help them to gain consumers trust in products and thus will lead to increased demand.

In this way its going to help producers in minimizing costs and increasing benefits and demand without any government intervention.


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