Recycling, Producer Responsibility and Centralized Waste Management

This paper examines a Waste Management Organisation's (WMO) pricing options to implement the Pareto-efficient allocation in an economy where materials are first extracted, then used for producing a consumption good and finally recycled or landfilled. The composition of consumption waste results from the producers' product design and affects the productivity of secondary material generation. The incentives of various pricing strategies for inducing an efficient (green) product design are studied. No simple and ideal scheme is found. The most favorable pricing strategies turn out to comprise of positive or negative fees on producers based on residuals and material inputs.