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Elasticity of demand, price and time: lessons from South Africa's plastic-bag levy

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  • Johane Dikgang
  • Anthony Leiman
  • Martine Visser

Abstract

Policy makers in many countries have perceived plastic-bag litter as a problem, and have used a variety of regulatory tools to address it. South Africa's current legislation on plastic-bags came into effect on 7 May 2003. It increased the thickness of the plastic used, charged a small levy and required that bags be sold rather than distributed gratis. These regulations sharply reduced consumption of plastic bags in the short term, but unlike the Irish and Danish levies have failed to curb their use meaningfully in the long run. It is suggested that the initial sharp fall in use of bags was a result of loss aversion rooted in an endowment effect (the bags having long been a free good). Once consumers became accustomed to paying for bags, demand slowly rose to its historic levels.

Suggested Citation

  • Johane Dikgang & Anthony Leiman & Martine Visser, 2012. "Elasticity of demand, price and time: lessons from South Africa's plastic-bag levy," Applied Economics, Taylor & Francis Journals, vol. 44(26), pages 3339-3342, September.
    • Handle: RePEc:taf:applec:44:y:2012:i:26:p:3339-3342
    DOI: 10.1080/00036846.2011.572859
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    References listed on IDEAS

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    1. He, Haoran, 2010. "The Effects of an Environmental Policy on Consumers: Lessons from the Chinese Plastic Bag Regulation," Working Papers in Economics 453, University of Gothenburg, Department of Economics.
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    1. Rebecca L. Taylor & Sofia B. Villas-Boas, 2016. "Bans vs. Fees: Disposable Carryout Bag Policies and Bag Usage," Applied Economic Perspectives and Policy, Agricultural and Applied Economics Association, vol. 38(2), pages 351-372.
    2. Thi Thanh Thuy Phan & Van Viet Nguyen & Hong Thi Thu Nguyen & Chun-Hung Lee, 2022. "Integrating Citizens’ Importance-Performance Aspects into Sustainable Plastic Waste Management in Danang, Vietnam," Sustainability, MDPI, vol. 14(16), pages 1-17, August.
    3. Doris Knoblauch & Linda Mederake & Ulf Stein, 2018. "Developing Countries in the Lead—What Drives the Diffusion of Plastic Bag Policies?," Sustainability, MDPI, vol. 10(6), pages 1-24, June.
    4. Taylor, Rebecca & Villas-Boas, Sofia B., 2015. "Bans versus Fees: Disposable Carryout Bag Policies and Bag Usage," 2015 AAEA & WAEA Joint Annual Meeting, July 26-28, San Francisco, California 204783, Agricultural and Applied Economics Association.
    5. Cabrera, José María & Caffera, Marcelo & Cid, Alejandro, 2020. "Modest and Incomplete Incentives May Have Very Large Effects: The Impact of Prices on the Demand for Plastic Bags," MPRA Paper 105051, University Library of Munich, Germany.
    6. Tatiana A. Homonoff, 2013. "Can Small Incentives Have Large Effects? The Impact of Taxes versus Bonuses on Disposable Bag Use," Working Papers 1483, Princeton University, Department of Economics, Industrial Relations Section..
    7. Cabrera, José María & Caffera, Marcelo & Cid, Alejandro, 2021. "Modest and incomplete incentives may work: Pricing plastic bags in Uruguay," Journal of Environmental Economics and Management, Elsevier, vol. 110(C).
    8. Baloch, Humair Ahmed & Nizamuddin, Sabzoi & Siddiqui, M.T.H. & Mubarak, N.M. & Mazari, Shaukat & Griffin, G.J. & Srinivasan, M.P., 2020. "Co-liquefaction of synthetic polyethylene and polyethylene bags with sugarcane bagasse under supercritical conditions: A comparative study," Renewable Energy, Elsevier, vol. 162(C), pages 2397-2407.
    9. Thornton Matheson, 2022. "Disposal is not free: fiscal instruments to internalize the environmental costs of solid waste," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 29(4), pages 1047-1073, August.
    10. Ms. Thornton Matheson, 2019. "Disposal is Not Free: Fiscal Instruments to Internalize the Environmental Costs of Solid Waste," IMF Working Papers 2019/283, International Monetary Fund.
    11. Rebecca L. C. Taylor, 2020. "A Mixed Bag: The Hidden Time Costs of Regulating Consumer Behavior," Journal of the Association of Environmental and Resource Economists, University of Chicago Press, vol. 7(2), pages 345-378.
    12. Tatiana A. Homonoff, 2018. "Can Small Incentives Have Large Effects? The Impact of Taxes versus Bonuses on Disposable Bag Use," American Economic Journal: Economic Policy, American Economic Association, vol. 10(4), pages 177-210, November.
    13. Dikgang, Johane & Leiman, Anthony & Visser, Martine, 2012. "Analysis of the plastic-bag levy in South Africa," Resources, Conservation & Recycling, Elsevier, vol. 66(C), pages 59-65.
    14. Juan-Pierré Bruwer & Lindiwe Mabesele & Timeeka Brown & Courtney Charles & Ingrid Coulter & Edlin Williams & Nadine Witbooi, 2021. "The Feasibility of Plastic Bag Usage for Newly Established South African Small, Medium and Micro Enterprises Amidst Increases in Sin tax: An Online Desktop Study," International Journal of Business Research and Management (IJBRM), Computer Science Journals (CSC Journals), vol. 12(4), pages 175-190, August.
    15. Maria Zunally Rapada & Derrick Ethelbhert Yu & Krista Danielle Yu, 2021. "Do Social Media Posts Influence Consumption Behavior towards Plastic Pollution?," Sustainability, MDPI, vol. 13(22), pages 1-18, November.
    16. Rebecca L. C. Taylor, 2022. "It's in the bag? The effect of plastic carryout bag bans on where and what people purchase to eat," American Journal of Agricultural Economics, John Wiley & Sons, vol. 104(5), pages 1563-1584, October.
    17. Liza Bell & Gina Scutelnicu Todoran, 2022. "Plastic bag legislation in the United States: influential factors on its creation," Journal of Environmental Studies and Sciences, Springer;Association of Environmental Studies and Sciences, vol. 12(2), pages 260-271, June.

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