Employing a Simulation Model to Quantitatively Measure the Impact of Tax Reward and Penalty Mechanisms on the Competitiveness of Recycled Products
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Abstract
The excessive consumption of manufactured goods makes recycling imperative, but the competitiveness of recycled products remains contingent on several factors, primarily tax policies. This study aimed to measure the impact of tax incentive and penalty mechanisms on the competitiveness of recycled products using a quantitative simulation model. Monte Carlo simulation methodology was employed to analyze the uncertainty in key variables (production costs, raw material price fluctuations, and consumer response). Data was generated based on common distributions of general behavior, and the model was programmed in R. The results showed a clear advantage for recycled products, with an average profit margin of 40.71% compared to 28.78% for conventional products, and a high probability of economic viability (98.00%). The competitiveness index also reached 3.002, reflecting a relative advantage for recycled products at 81.4% compared to 18.6% for conventional products. Analyzing different scenarios, strong incentive policies demonstrated higher competitiveness than current policies. The findings confirm that the effectiveness of tax mechanisms (rewards and penalties) plays a positive role in stimulating the circular sector. The researchers recommend adopting these findings as a roadmap for fiscal policymakers to design integrated tax packages that support the transition to a circular economy and achieve a balance between environmental and economic dimensions.
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