Digital Product Passport Adoption and Reverse Channel Selection in Circular Construction Supply Chains

Abstract The Digital Product Passport (DPP) is increasingly seen as a crucial tool for shifting the construction industry from a linear to a circular economy. However, merely complying with digital DPP requirements may be insufficient to substantially improve physical product circularity. To address this challenge, we develop a three-stage Stackelberg game model for closed-loop supply chains (CLSC) incorporating DPP, aimed at examining DPP decision mechanisms and proposing strategies to encourage DPP adoption. Our findings indicate that large-scale exchange platforms are the most effective reverse channel for collecting used materials. Furthermore, implementing a minimal reuse potential policy for manufacturers, combined with two-part tariff contracts, can enhance CLSC performance. We also propose that circularity inspections of new products can incentivize manufacturers to enhance product circularity. This study provides actionable guidance for companies and policymakers on making retrofit decisions within the DPP framework, with potential benefits including increased product reuse, higher collection rates, and broader acceptance of DPP.