The curse of low-valued recycling

Hiroaki Ino and Norimichi Matsueda

Journal of Regulatory Economics, 2019, vol. 55, issue 3, No 3, 282-306

Abstract: Abstract This paper discusses how to deal with low-valued recyclable wastes whose reprocessing itself does not pay financially. While such a recycling activity can potentially improve social welfare if the social costs associated with their disposal are sufficiently significant, governmental policies to promote recycling may lead to illegal disposal. Explicitly considering the monitoring cost in preventing firms from disposing of collected wastes illicitly, we show that the second-best policy for a low-valued recyclable is either one of the two following schemes: a deposit-refund scheme (DRS) that gives birth to a recycling market and an advanced-disposal fee that does not create a recycling market. However, in order to select the optimal policy scheme and implement it appropriately, a policymaker needs information available only in the recycling market. Thus, the structure of the second-best policy itself entails critical information issues in its implementation, which is in stark contrast to a DRS for a non-low-valued recyclable.

Keywords: Hazardous and household solid waste; Illegal waste disposal; Enforcement; Compliance; Government-induced recycling; Optimal taxation (search for similar items in EconPapers)
JEL-codes: H21 Q21 Q28 (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Working Paper: The Curse of Low-valued Recycling (2018)
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DOI: 10.1007/s11149-019-09378-9

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