Optimal environmental policy for waste disposal and recycling when firms are not compliant
AbstractWe investigate a model that considers disposal and recycling activities after the consumption of products. In the field, the deposit-refund (D-R) policy has been considered as an ideal policy for internalizing disposal costs, which can result in the realization of the first-best policy. However, the possibility of firms' illegal disposal has been neglected. We introduce a monitoring cost to prevent firms from disposing of collected residuals illegally and induce the second-best D-R policy. We find that the relation between the monitoring problem for firms and the price of the recycling market brings about a variation in the optimal level of the refunds (which is typically smaller than the first-best level). Further, we investigate an alternative policy that requires producers to take-back residuals and show how this policy works equivalently to the second-best D-R policy by applying the theory of the tradable rights market.
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Bibliographic InfoArticle provided by Elsevier in its journal Journal of Environmental Economics and Management.
Volume (Year): 62 (2011)
Issue (Month): 2 (September)
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Web page: http://www.elsevier.com/locate/inca/622870
Deposit Refund Monitoring Illegal waste disposal Take-back requirement Tradable rights;
Other versions of this item:
- Hiroaki Ino, 2010. "Optimal Environmental Policy for Waste Disposal and Recycling When Firms Are Not Compliant," Discussion Paper Series 50, School of Economics, Kwansei Gakuin University, revised Jan 2010.
- H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
- Q21 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Demand and Supply (the Commons)
- Q28 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Government Policy
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