TY  - JOUR
AU  - Fullerton,Don
AU  - Kinnaman,Thomas C.
TI  - Garbage, Recycling, and Illicit Burning or Dumping
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 4374
PY  - 1996
Y2  - January 1996
UR  - http://www.nber.org/papers/w4374
L1  - http://www.nber.org/papers/w4374.pdf
N1  - Author contact info:
Don Fullerton
Department of Finance
University of Illinois
BIF Box#30 (MC520)
515 East Gregory Drive
Champaign, IL  61820
Tel: 217/244-3621
Fax: 217/244-3102
E-Mail: dfullert@illinois.edu
AB  - Additional solid waste disposal imposes resource and environmental costs, but most residents still pay no additional fee per marginal unit of garbage collection. In a simple model with garbage and recycling as the only two disposal options, we show that the optimizing fee for garbage collection equals the resource cost plus environmental cost. When illicit burning or dumping is a third disposal option, however, the optimizing fee for garbage collection can change sign. Burning or dumping is not a market activity and cannot be taxed directly, but it can be discouraged indirectly by a system with a tax on all output plus a rebate on proper disposal either through recycling or garbage collection. This optimizing fee structure is essentially a deposit-refund system. The output tax helps achieve the first-best allocation even though it may affect the choice between consumption and untaxed leisure, because consumption leads to disposal problems while leisure does not.
ER  -