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Policies to Encourage Recycling and "Design for Environment": What to Do When Markets are Missing

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Author Info
Walls, Margaret () (Resources for the Future)
Calcott, Paul
Abstract

Several studies have shown the efficiency of both a Pigovian tax on waste disposal and a deposit-refund instrument, that is a combined output tax and recycling subsidy. The efficiency of these instruments, however, critically depends on households being paid for recycling. In reality, although most households have access to curbside recycling services, they are not paid for the items they set out at the curb. All items placed in a recycling bin are thus of equal value to a household, and there is no incentive for producers to make their products any more recyclable than what is necessary to be eligible for the bin. This paper characterizes the constrained (second-best) optimum that exists with the missing recycling market and solves for a modified deposit-refund instrument that will achieve the constrained optimum.

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Paper provided by Resources For the Future in its series Discussion Papers with number dp-00-30.

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Date of creation: 01 Jun 2000
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Handle: RePEc:rff:dpaper:dp-00-30

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  1. Palmer, Karen & Martinez, Salvador & Jenkins, Robin & Podolsky, Michael, 1999. "The Determinants of Household Recycling: A Material Specific Analysis of Unit Pricing and Recycling Program Attributes," Discussion Papers dp-99-41-rev, Resources For the Future. [Downloadable!]
  2. Choe, Chongwoo & Fraser, Iain, 1999. "An Economic Analysis of Household Waste Management," Journal of Environmental Economics and Management, Elsevier, vol. 38(2), pages 234-246, September. [Downloadable!] (restricted)
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  3. Don Fullerton & Ann Wolverton, 2000. "Two Generalizations of a Deposit-Refund System," NBER Working Papers 7505, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  4. Don Fullerton & Wenbo Wu, 1996. "Policies for Green Design," NBER Working Papers 5594, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  5. Fullerton Don & Kinnaman Thomas C., 1995. "Garbage, Recycling, and Illicit Burning or Dumping," Journal of Environmental Economics and Management, Elsevier, vol. 29(1), pages 78-91, July. [Downloadable!] (restricted)
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  6. Hilary A. Sigman, 1995. "A Comparison of Public Policies for Lead Recycling," RAND Journal of Economics, The RAND Corporation, vol. 26(3), pages 452-478, Autumn. [Downloadable!] (restricted)
  7. Walls, Margaret & Palmer, Karen, 2001. "Upstream Pollution, Downstream Waste Disposal, and the Design of Comprehensive Environmental Policies," Journal of Environmental Economics and Management, Elsevier, vol. 41(1), pages 94-108, January. [Downloadable!] (restricted)
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  8. Palmer, Karen & Sigman, Hilary & Walls, Margaret, 1997. "The Cost of Reducing Municipal Solid Waste," Journal of Environmental Economics and Management, Elsevier, vol. 33(2), pages 128-150, June. [Downloadable!] (restricted)
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  9. Palmer, Karen & Walls, Margaret, 1997. "Optimal policies for solid waste disposal Taxes, subsidies, and standards," Journal of Public Economics, Elsevier, vol. 65(2), pages 193-205, August. [Downloadable!] (restricted)
  10. Dinan Terry M., 1993. "Economic Efficiency Effects of Alternative Policies for Reducing Waste Disposal," Journal of Environmental Economics and Management, Elsevier, vol. 25(3), pages 242-256, November. [Downloadable!] (restricted)
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