Economics Commons^™

Policies For Green Design, Don Fullerton, Wenbo Wu

Don Fullerton

A simple general equilibrium model is used to analyze disposal-content fees, subsidies for recyclable designs, unit-pricing of household disposal, deposit-refund systems, and manufacturer “take-back” requirements. Firms use primary and recycled inputs to produce output that has two “attributes”: packaging per unit output, and recyclability. If households pay the social cost of disposal, then they send the right signals to producers to reduce packaging and to design products that can more easily be recycled. If garbage is collected for free, then socially optimum attributes can still be achieved by a tax on producers’ use of packaging and subsidy to recyclable designs.