The Dynamic Effects of Recycling on Oligopoly Competition: Evidence from the US Paper Industry

Eddie Watkins

American Economic Journal: Microeconomics, 2024, vol. 16, issue 3, 76-106

Abstract: Consumer recycling generates new intermediate inputs. If some of the inputs are used to manufacture a substitute for the original product, the primary seller faces an incentive to reduce current output and raise rivals' future costs. I find that firms in the US paper industry facing exposure to future competition from the recycled sector, based on differences between product specific recycling technologies, reduced output more than firms not exposed to the recycled sector as consumer recycling increased. I then use the model to illustrate how the strategic response to recycling affects environmental policy.

JEL-codes: D43 L13 L73 Q53 Q58 (search for similar items in EconPapers)
Date: 2024
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DOI: 10.1257/mic.20200301

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