Municipal food waste recycling as an environmental strategy: a game-theoretical approach

With the expansion of urbanization, we are witnessing the growing uncertainty in municipal food demand leading to an increase in urban waste. With the motive of producing organic fertilizers and conserving the environment, expired food can be collected and recycled. This study examines the hypothesis that leasing recycling facilities from peri-urban areas, due to the ban on reproduction operations in the city centers, can manage the recycling system participants' relationship and enhance sustainability in urban communities. The problem has been investigated under two separate sources of uncertainty, namely, quality and capacity. In the first scenario, a recycling system consisting of a commercial food service located in urban areas, a food waste collection agency, and a suburban fertilizer factory is optimized, in which the commercial food service leases the fertilizer factory's facilities for recycling operations. In the second scenario, the two factories' relationship, in which the first factory can rent the second factory's facilities in case of capacity shortage, is managed through hybrid contracts and mathematical programming models. The results show that the whole system optimization and Pareto Improvement results for all members are guaranteed under proposed hybrid contracts. These conclusions can help food recycling system managers have a better relationship with other players in their supply chains and enhance their credibility for caring about the environment, social concerns, and government compliance.