The political cost of residual municipal solid waste taxation: perception versus reality

In this paper we set up a stylized theoretical model of consumers’ preference regarding the price for residual municipal solid waste collection and processing services set by the local municipalities. As we are not sure about the information content taken into account by the electorate when judging the incumbents performance, we distinguish between three scenarios prevailing in the political economics literature. In the first scenario a representative consumer maximizes its utility subject to its waste balance equation and its budget constraint. Inspired by the median voter literature, the second scenario adds the local policy makers budget constraint to the basic consumers’ choice problem. In the third scenario we assume the representative consumer compares the price for residual municipal solid waste they pay with the price in neighbouring municipalities and use this price as a yardstick when judging the performance of their incumbent. The predictions from our models are tested using observation for all 308 municipalities in Flanders (Belgium) in 2006 and 2009. The results clearly indicate that consumers hold the local policy makers responsible for residual waste prices, but they do so without using prices in neighbouring municipalities as a yardstick. Political costs in terms of popularity scores rather seem to depend on absolute price levels and (recent) changes in the price levels. Our data also show that local policymakers engage in price mimicking, but apparently this has little influence on re-election chances