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Extended Product Responsibility: An Economic Assessment of Alternative Policies

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  • Palmer, Karen

    () (Resources for the Future)

  • Walls, Margaret

    () (Resources for the Future)

Abstract

Extended Product Responsibility embodies the notion that agents along a product chain should share responsibility for the life-cycle environmental impacts of the product, including those associated with ultimate disposal. Extended Producer Responsibility is a narrower concept which places responsibility on producers and focuses primarily on post-consumer waste disposal. Manufacturer "take-back" requirements are the policy lever most often associated with Extended Producer Responsibility. In this paper, the authors discuss alternative incentive-based policies that are consistent with the objectives of Extended Product and Producer Responsibility. They argue that an upstream combined product tax and recycling subsidy (UCTS) is generally more cost-effective and imposes fewer transactions costs than the take-back approach. They also consider the strengths and weaknesses of a policy not targeted at producers: unit-based pricing of residential waste collection and disposal. The authors find that this option shows potential for achieving non-trivial reductions in solid waste. Widespread application in the U.S. of a $1.00 charge per 32-gallon bag could reduce total municipal solid waste disposed by approximately 13 percent per year.

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Paper provided by Resources For the Future in its series Discussion Papers with number dp-99-12.

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Date of creation: 01 Jan 1999
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Handle: RePEc:rff:dpaper:dp-99-12

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References

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  1. Don Fullerton & Wenbo Wu, 1996. "Policies for Green Design," NBER Working Papers 5594, National Bureau of Economic Research, Inc.
  2. Kinnaman, Thomas C. & Fullerton, Don, 2000. "Garbage and Recycling with Endogenous Local Policy," Journal of Urban Economics, Elsevier, vol. 48(3), pages 419-442, November.
  3. Fullerton, Don & Kinnaman, Thomas C, 1996. "Household Responses to Pricing Garbage by the Bag," American Economic Review, American Economic Association, vol. 86(4), pages 971-84, September.
  4. Spence, Michael, 1976. "Product Differentiation and Welfare," American Economic Review, American Economic Association, vol. 66(2), pages 407-14, May.
  5. 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.
  6. Fullerton, Don, 1997. "Environmental Levies and Distortionary Taxes: Comment," American Economic Review, American Economic Association, vol. 87(1), pages 245-51, March.
  7. Palmer, Karen & Walls, Margaret, 2000. "Upstream Pollution, Downstream Waste Disposal, and the Design of Comprehensive Environmental Policies," Discussion Papers dp-97-51-rev, Resources For the Future.
  8. 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.
  9. 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.
  10. A. Michael Spence, 1975. "Monopoly, Quality, and Regulation," Bell Journal of Economics, The RAND Corporation, vol. 6(2), pages 417-429, Autumn.
  11. Marie Lynn Miranda & Jess W. Everett & Daniel Blume & Barbeau A. Roy, 1994. "Market-based incentives and residential municipal solid waste," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 13(4), pages 681-698.
  12. Spulber, Daniel F., 1985. "Effluent regulation and long-run optimality," Journal of Environmental Economics and Management, Elsevier, vol. 12(2), pages 103-116, June.
  13. Bulow, Jeremy, 1986. "An Economic Theory of Planned Obsolescence," The Quarterly Journal of Economics, MIT Press, vol. 101(4), pages 729-49, November.
  14. Carl Shapiro, 1982. "Consumer Information, Product Quality, and Seller Reputation," Bell Journal of Economics, The RAND Corporation, vol. 13(1), pages 20-35, Spring.
  15. Leland, Hayne E, 1979. "Quacks, Lemons, and Licensing: A Theory of Minimum Quality Standards," Journal of Political Economy, University of Chicago Press, vol. 87(6), pages 1328-46, December.
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Cited by:
  1. Paul Calcott & Margaret Walls, 2000. "Can Downstream Waste Disposal Policies Encourage Upstream "Design for Environment"?," American Economic Review, American Economic Association, vol. 90(2), pages 233-237, May.
  2. Chen, Yenming & Sheu, Jiuh-Biing, 2007. "Environmental-Regulation Pricing Strategies for Green Supply Chain Management," MPRA Paper 25255, University Library of Munich, Germany.
  3. Asunción Arner Güerre & Ramón Barberán Ortí & Jesús Mur Lacambra, 2003. "Las políticas públicas de fomento del reciclaje: La regeneración de aceites usados," Hacienda Pública Española, IEF, vol. 167(4), pages 33-55, December.
  4. Marco Runkel, 2003. "Product Durability and Extended Producer Responsibility in Solid Waste Management," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 24(2), pages 161-182, February.

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