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Corrective Taxation for Curbing Pollution and Promoting Green Product Design and Recycling

  • Thomas Eichner


  • Rüdiger Pethig


In this paper we consider a competitive economy with flows of materials from extraction via recycling to landfilling which exhibits distortions due to pollution, external landfilling costs and inefficient product design. The allocative impact of tax-subsidy policies aiming at internalizing the distortions are analyzed when the pertinent tax-subsidy rates were successively raised from zero toward their efficiency restoring levels. Promoting recyclability by greening the product design stimulates recycling as expected. But it also increases primary material extraction and – possibly – the total waste flow, and it reduces the recycling ratio. Copyright Kluwer Academic Publishers 2003

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Article provided by European Association of Environmental and Resource Economists in its journal Environmental and Resource Economics.

Volume (Year): 25 (2003)
Issue (Month): 4 (August)
Pages: 477-500

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Handle: RePEc:kap:enreec:v:25:y:2003:i:4:p:477-500
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  1. Smith, Vernon L, 1972. "Dynamics of Waste Accumulation: Disposal Versus Recycling," The Quarterly Journal of Economics, MIT Press, vol. 86(4), pages 600-616, November.
  2. Ann Wolverton & Don Fullerton, 2000. "Two Generalizations of a Deposit-Refund Systems," American Economic Review, American Economic Association, vol. 90(2), pages 238-242, May.
  3. Margaret Walls & Paul Calcott, 2000. "Can Downstream Waste Disposal Policies Encourage Upstream "Design for Environment"?," American Economic Review, American Economic Association, vol. 90(2), pages 233-237, May.
  4. Chongwoo Choe & Iain Fraser, 1997. "An Economic Analysis of Household Waste Management," Working Papers 1997.11, School of Economics, La Trobe University.
  5. Don Fullerton & Wenbo Wu, 1996. "Policies for Green Design," NBER Working Papers 5594, National Bureau of Economic Research, Inc.
  6. Schulze, William D., 1974. "The optimal use of non-renewable resources: The theory of extraction," Journal of Environmental Economics and Management, Elsevier, vol. 1(1), pages 53-73, May.
  7. Thomas Eichner & Rüdiger Pethig, 1999. "Product Design and efficient Management of Recycling and Waste Treatment," Volkswirtschaftliche Diskussionsbeiträge 76-99, Universität Siegen, Fakultät Wirtschaftswissenschaften, Wirtschaftsinformatik und Wirtschaftsrecht.
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