Pricing Decisions for Recycled Building Materials with Misrepresentation of Information from Social Exchange Theory

Recycled building materials offer an effective economic solution to the environmental issues caused by construction and demolition waste (CDW). However, they also create opportunities for information misrepresentation by remanufacturers. Despite the significance of this issue, existing research has largely overlooked the impact of such misrepresentation on the pricing decisions for recycled building materials. The study aims to reveal how information misrepresentation influences pricing in the context of recycled building materials. This paper develops a supply chain model for the resource utilization of construction waste, consisting of both a remanufacturer of recycled building materials and a traditional building material manufacturer. The model evaluates the effects of information misrepresentation by the remanufacturer on pricing decisions. The main findings are as follows: (1) The impact of misrepresentation of information on manufacturers depends on government subsidies and the remanufacturing process misrepresentation factor. When the government adopts a low subsidy policy, as the remanufacturing process misrepresentation factor increases, manufacturers’ profits are U shaped. When the government adopts a high subsidy policy, manufacturers’ profits are positively related to the remanufacturing process misrepresentation factor. (2) When government subsidies exceed a certain threshold, there is a negative impact on remanufacturers, who tend to reduce the level of misrepresentation in their remanufacturing processes. This study not only broadens the research on information misrepresentation through the lens of social exchange theory but also provides valuable insights for government policy decisions, particularly in regulating misrepresentation behaviors by remanufacturers under various scenarios.