“Squaring the Circle”—The Disregarded Institutional Theory and the Distorted Practice of Packaging Waste Recycling in Romania

Octavian-Dragomir Jora, Alexandru Pătruți, Mihaela Iacob and Delia-Raluca Șancariuc
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Octavian-Dragomir Jora: The Department of International Business and Economics, The Faculty of International Business and Economics, The Bucharest University of Economic Studies, 010374 Bucharest, Romania
Alexandru Pătruți: The Department of International Business and Economics, The Faculty of International Business and Economics, The Bucharest University of Economic Studies, 010374 Bucharest, Romania
Delia-Raluca Șancariuc: The Doctoral School in Economics and International Affairs, The Bucharest University of Economic Studies, 010374 Bucharest, Romania
Authors registered in the RePEc Author Service: Alexandru Patruti

Sustainability, 2020, vol. 12, issue 22, 1-22

Abstract: The European Union (EU) remains one of the leading-edge jurisdictions on the planet in legislating and enforcing the circular economy, a token of its forthright environmental awareness. Still, given that the level of economic development across the EU member states is heterogenous, this concern, however generous it may be, looks too beyond “their” means and too ahead of “its” times. What the European policymakers seem to disregard is that top-down institutional constructions, as is the case with the EU’s overambitious environmental legislation, can end up in severe distortions. Imposing/importing an institutionalized arrangement without due preparation may fuel resistance to (even positive) change, as the biases it engenders translate into considerable costs and selective benefits. The present article attempts a novel approach within the literature, where the failure to achieve recycling targets is usually considered the fault of private businesses. Instead, our study explains suboptimal environmental results by the institutionalization of spiraling governmental interventions in markets, meant to make the arbitrarily set recycling/reuse targets artificially viable. Subject to EU rules, Romania’s packaging waste recycling market is a textbook case in revealing this outcome predicted by economic theory, as our statistical data suggest. The conclusion is that it is equally perilous to neglect the calibration of legislative targets according to institutional and economic development as it is to reject environmental claims based on their costs.

Keywords: circular economy; neo-institutional economics; environmental legislation; top-down institutions; recycling and reuse targets; market distortions; EU packaging waste directive; Romanian recycling industry (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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