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Solid Waste Market Distortions And Recycling

H. Bartelings, R. B. Dellink, E. C. Van Ierland

Abstract


Solid waste management is an important topic in environmental economics, and there is a need for providing better incentives to further optimize the chain of materials and waste. We investigate market distortions caused by flat fee pricing in the solid waste market and we show how flat fee pricing influences households in their decisions to recycle, separate or dispose of rest waste. We develop and apply a general equilibrium model for the solid waste market and describe in detail how market distortions, as a result of flat fee pricing, can be analyzed in an applied general equilibrium framework. A
numerical example demonstrates the effects of flat fee pricing on both waste generation and recycling. In the presence of flat fee pricing, the cost of recycling has no impact on the behavior of households, and thus households are not responsive to recycling subsidies. The results show that introducing a unit-based pricing scheme for waste collection can stimulate recycling far more effectively than subsidies and improve the effectiveness of recycling policies.

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