How a Fee Per-Unit Garbage Affects Aggregate Recycling in a Model with Heterogeneous Households

This paper develops a utility maximizing model of household choice among garbage disposal, recycling, and littering. The impact of a user fee for garbage collection is modelled for heterogeneous households with different preferences for recycling. The model explains (1) why some households participate in curbside recycling programs even in the absence of a user fee, (2) why other households do not participate, even in the presence of a user fee, and (3) why some households choose to litter when others do not. Household choices are aggregated to determine the effect of a user fee on the community-wide quantities of garbage, recycling, and litter. We show how an increase in the user fee can decrease aggregate recycling.