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Policies for Green Design

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  • Don Fullerton
  • Wenbo Wu

Abstract

We analyze alternative policies such as a disposal content fee, a subsidy for recyclable designs, unit pricing of household disposal, a deposit-refund system, and a manufacturer `take-back' requirement. In order to identify the problem being addressed, we build a simple general equilibrium model in which household utility depends on a negative externality from total waste generation, and in which firms use primary and recycled inputs to produce output that has two `attributes': packaging per unit output, and recyclability. If households pay the social cost of disposal, then they send the right signals to producers to reduce packaging and to design products that can more easily be recycled. But if local governments are constrained to collect household garbage for free, then households do not send the right signals to producers. The socially optimal attributes can still be achieved by a tax on producers' use of packaging and subsidy to producers' use of recyclable designs.

Suggested Citation

  • Don Fullerton & Wenbo Wu, 1996. "Policies for Green Design," NBER Working Papers 5594, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:5594
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    More about this item

    JEL classification:

    • D6 - Microeconomics - - Welfare Economics
    • H2 - Public Economics - - Taxation, Subsidies, and Revenue

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