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The curse of low-valued recycling

Author

Listed:
  • Hiroaki Ino

    (Kwansei Gakuin University)

  • Norimichi Matsueda

    (Kwansei Gakuin University)

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.

Suggested Citation

  • Hiroaki Ino & Norimichi Matsueda, 2019. "The curse of low-valued recycling," Journal of Regulatory Economics, Springer, vol. 55(3), pages 282-306, June.
    • Handle: RePEc:kap:regeco:v:55:y:2019:i:3:d:10.1007_s11149-019-09378-9
    DOI: 10.1007/s11149-019-09378-9
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    More about this item

    Keywords

    Hazardous and household solid waste; Illegal waste disposal; Enforcement; Compliance; Government-induced recycling; Optimal taxation;
    All these keywords.

    JEL classification:

    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • Q21 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Demand and Supply; Prices
    • Q28 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Government Policy

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