Taxation and Transparency: How Policy Decisions Impact Product Quality and Sustainability

Abstract

Product markets can be modeled as complex systems that account for a diverse set of stakeholders and interactions. Decisions by all of the stakeholders in these systems can affect the design of new products, not only from design teams but also from consumers, producers, and policymakers. Studies of market systems have shown how producers can make profitoptimal decisions on product design and pricing, and how those decisions influence a number of different factors including the quality, environmental impact, production costs, and ultimately consumer demand for the product. This study presents and demonstrates the use of a framework for modeling the ways that policies and consumer demand influence optimal product design and, in particular, product quality and environmental sustainability. Employing this model for the tolerance and material design decisions for a mobile phone case shows how different environmental impact scales, taxation levels, and information available to consumers will influence producer profits and overall environmental impacts. This demonstrates how different policies can be evaluated for their impacts on economic success for producers and reduced environmental impacts for society, and a “win–winâ€‌ scenario is found for the mobile phone case.