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Product Durability, Solid Waste Management and Market Structure

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  • Marco Runkel

Abstract

For a durable consumption good which turns into waste after consumption, the socially optimal durability increases with an increase in the marginal environmental damage. In a laissez-faire equilibrium under perfect competition, producers fail to provide an efficient product design, i.e. durability is inefficiently small, whereas the amount of solid waste is inefficiently large. The market failure is corrected simply by Pigouvian taxation which also can be interpreted as an extension of the producer responsibility. In the case of imperfect competition (oligopoly or monopoly) Pigouvian taxation indeed ensures an efficient durability but generally not an efficient amount of solid waste.

Suggested Citation

  • Marco Runkel, 1999. "Product Durability, Solid Waste Management and Market Structure," Volkswirtschaftliche Diskussionsbeiträge 78-99, Universität Siegen, Fakultät Wirtschaftswissenschaften, Wirtschaftsinformatik und Wirtschaftsrecht.
  • Handle: RePEc:sie:siegen:78-99
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    File URL: http://www.wiwi.uni-siegen.de/vwl/repec/sie/papers/78-99.pdf
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    References listed on IDEAS

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    8. Swan, Peter L, 1970. "Durability of Consumption Goods," American Economic Review, American Economic Association, vol. 60(5), pages 884-894, December.
    9. Schmalensee, Richard, 1979. "Market Structure, Durability, and Quality: A Selective Survey," Economic Inquiry, Western Economic Association International, vol. 17(2), pages 177-196, April.
    10. Highfill, Jannett & McAsey, Michael, 1997. "Municipal Waste Management: Recycling and Landfill Space Constraints," Journal of Urban Economics, Elsevier, vol. 41(1), pages 118-136, January.
    11. 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.
    12. Swan, Peter L, 1977. "Product Durability under Monopoly and Competition: Comment," Econometrica, Econometric Society, vol. 45(1), pages 229-235, January.
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    Cited by:

    1. Thomas Christiaans, 2003. "Non-Scale Growth, Endogenous Comparative Advantages, and Industrialization," Volkswirtschaftliche Diskussionsbeiträge 113-03, Universität Siegen, Fakultät Wirtschaftswissenschaften, Wirtschaftsinformatik und Wirtschaftsrecht.
    2. Thomas Eichner & Marco Runkel, 2000. "Efficient and Sustainable Management of Product Durability and Recyclability," Volkswirtschaftliche Diskussionsbeiträge 88-00, Universität Siegen, Fakultät Wirtschaftswissenschaften, Wirtschaftsinformatik und Wirtschaftsrecht.
    3. Thomas Christiaans, 2003. "Aging in a Neoclassical Theory of Labor Demand," Volkswirtschaftliche Diskussionsbeiträge 112-03, Universität Siegen, Fakultät Wirtschaftswissenschaften, Wirtschaftsinformatik und Wirtschaftsrecht.
    4. Hagen Bobzin, 1999. "Dualities in the Functional Representations of a Production Technology," Volkswirtschaftliche Diskussionsbeiträge 79-99, Universität Siegen, Fakultät Wirtschaftswissenschaften, Wirtschaftsinformatik und Wirtschaftsrecht.
    5. Hagen Bobzin, 2001. "Das duale Programm der Erloesmaximierung in der Aussenhandelstheorie," Volkswirtschaftliche Diskussionsbeiträge 98-01, Universität Siegen, Fakultät Wirtschaftswissenschaften, Wirtschaftsinformatik und Wirtschaftsrecht.
    6. Hagen Bobzin, 2002. "Fundamentals of Production Theory in International Trade. A Modern Approach Based on Theory of Duality," Volkswirtschaftliche Diskussionsbeiträge 104-02, Universität Siegen, Fakultät Wirtschaftswissenschaften, Wirtschaftsinformatik und Wirtschaftsrecht.

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