Global Reuse and Optimal Waste Policy
Exporting used durable goods for additional consumption in a developing economy, a concept we call \global reuse", has unfortunate negative consequences if those goods contain toxic substances. The cathode ray tubes (CRTs) of televisions and personal computers contain large amounts of lead oxide and cadmium - substances harmful to the natural environment and to human health. But unfortunately the importers of used durable goods rarely possess the technologies, policies, and en- forcement infrastructures necessary to appropriately dispose hazardous waste. A simple general equilibrium model of two-country trade is constructed to discover solutions to the problems associated with global reuse, focusing on policies in de- veloped country. This paper shows that the dual policy of waste tax and exporting tax can achieve social optimum under global reuse economy with negative exter- nality of waste. When developed country is unable to assess exporting tax perhaps due to some pressure from a domestic industry, the waste tax or subsidy can be the alternative policy.
|Date of creation:||Mar 2010|
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