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On inefficiency and instability in decentralized recycling systems

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  • Kazuhiko Nishimura

    (Nihon Fukushi University)

Abstract

We identify a source of inefficiency in decentralized recycling systems by taking into account the technological characteristics of recycling activity. We show that competitive market promotion cannot obtain Pareto efficient allocations when the recycling agent perceives recyclables of any quality as perfect substitutes while its productivity is dependent on the quality of the recyclables available. We further demonstrate the instability of the system by investigating the economic adjustment process in the presence of such external effects. Our results suggest that policy interventions that oblige the primary producer to recycle would eliminate these obstacles.

Suggested Citation

  • Kazuhiko Nishimura, 2001. "On inefficiency and instability in decentralized recycling systems," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 4(3), pages 191-210, September.
    • Handle: RePEc:spr:envpol:v:4:y:2001:i:3:d:10.1007_bf03354015
    DOI: 10.1007/BF03354015
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    References listed on IDEAS

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