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Optimal Environmental Policy for Waste Disposal and Recycling When Firms Are Not Compliant

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  • Hiroaki Ino

    (Kwansei Gakuin University)

Abstract

We investigate, considering disposal and recycling activities after the consumption of products, the models that explicitly incorporate both the product market and the recycling market. In the field, the deposit-refund (D-R) policy has been discussed as an ideal policy to internalize disposal cost, which can result in the realization of the first-best policy. However, the possibility of firms f illegal disposal has been neglected. We introduce monitoring cost to prevent firms from disposing of collected residuals illegally and induce the second-best D-R policy. We find that the monitoring problem for firms brings about a variety in the optimal level of the refunds (which is typically be smaller than the first best level). Furthermore, 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 tradable emission permits market. We find that the second-best system of this policy is the combination of the take-back requirement depending on the amount of each firm fs outputs and initial exemption from that requirement.

Suggested Citation

  • 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.
    • Handle: RePEc:kgu:wpaper:50
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    References listed on IDEAS

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    Cited by:

    1. Ibrahim Sufiyan, 2020. "Assessment Of Public Participation On Solid Waste Disposal In Southern Kaduna State, Nigeria," Journal of Wastes and Biomass Management (JWBM), Zibeline International Publishing, vol. 2(1), pages 15-18:2, July.
    2. Matsueda, Norimichi & Nagase, Yoko, 2012. "An economic analysis of the Packaging waste Recovery Note System in the UK," Resource and Energy Economics, Elsevier, vol. 34(4), pages 669-679.
    3. Shteryo Nozharov, 2018. "Transaction Costs In Collective Waste Recovery Systems In The Eu," Economic Archive, D. A. Tsenov Academy of Economics, Svishtov, Bulgaria, issue 1 Year 20, pages 18-30.
    4. Satoshi Honma, 2019. "Optimal policies for international recycling between developed and developing countries," Letters in Spatial and Resource Sciences, Springer, vol. 12(2), pages 143-153, August.
    5. D’Amato, Alessio & Mazzanti, Massimiliano & Nicolli, Francesco, 2015. "Waste and organized crime in regional environments," Resource and Energy Economics, Elsevier, vol. 41(C), pages 185-201.
    6. Diana Roa & Knut Einar Rosendahl, 2023. "Policies for Material Circularity: the Case of Lithium," Circular Economy and Sustainability,, Springer.
    7. Acuff, Kaylee & Kaffine, Daniel T., 2013. "Greenhouse gas emissions, waste and recycling policy," Journal of Environmental Economics and Management, Elsevier, vol. 65(1), pages 74-86.
    8. Hirotaka Kumamaru & Kenji Takeuchi, 2023. "The recycled content of plastic products: estimating the impact of a recycling law on the input mix," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 25(3), pages 355-376, July.
    9. Wolfram Berger & Yoko Nagase, 2018. "Waste management regulation: policy solutions and policy shortcomings," Scottish Journal of Political Economy, Scottish Economic Society, vol. 65(3), pages 205-223, July.
    10. Walls, Margaret, 2011. "Deposit-Refund Systems in Practice and Theory," RFF Working Paper Series dp-11-47, Resources for the Future.
    11. Yixuan Wang & Xingle Long & Liang Li & Qinglin Wang & Xiping Ding & Sijia Cai, 2021. "Extending theory of planned behavior in household waste sorting in China: the moderating effect of knowledge, personal involvement, and moral responsibility," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 23(5), pages 7230-7250, May.
    12. Angelo Antoci & Simone Borghesi & Mauro Sodini, 2012. "ETS and Technological Innovation: A Random Matching Model," Working Papers 2012.79, Fondazione Eni Enrico Mattei.
    13. Daniel T. Kaffine, 2014. "Scrap Prices, Waste, and Recycling Policy," Land Economics, University of Wisconsin Press, vol. 90(1), pages 169-180.
    14. Hiroshi Kinokuni & Shuichi Ohori & Yasunobu Tomoda, 2019. "Optimal Waste Disposal Fees When Product Durability is Endogenous: Accounting for Planned Obsolescence," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 73(1), pages 33-50, May.
    15. Hiroaki Ino & Norimichi Matsueda, 2019. "The curse of low-valued recycling," Journal of Regulatory Economics, Springer, vol. 55(3), pages 282-306, June.
    16. Mansikkasalo, Anna & Lundmark, Robert & Söderholm, Patrik, 2014. "Market behavior and policy in the recycled paper industry: A critical survey of price elasticity research," Forest Policy and Economics, Elsevier, vol. 38(C), pages 17-29.
    17. Patrik Söderholm & Tomas Ekvall, 2020. "Metal markets and recycling policies: impacts and challenges," Mineral Economics, Springer;Raw Materials Group (RMG);Luleå University of Technology, vol. 33(1), pages 257-272, July.

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    More about this item

    Keywords

    Deposit; Refund; Monitoring; IllegalWaste Disposal; Take-back requirement; Tradable rights;
    All these keywords.

    JEL classification:

    • 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; Prices
    • Q28 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Government Policy

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