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Regulating solid waste externalities through tax/fee systems
Abstract
This dissertation analyzes the use of taxes or fees to regulate the external costs of solid waste. Such costs include the environmental impacts of producing and disposing the materials that become waste, and the monetary costs of collecting and disposing trash. A theoretical model estimates the welfare impacts of imposing externality taxes while varying supply and demand conditions, the size of the external costs, and the error in estimating those costs. The impacts on consumers, producers, government tax revenues, and external costs are shown separately. Two chapters extract empirical information from the literature. First, evidence on the market structure in one relevant industry--plastics--is summarized. Second, studies on price elasticities of demand for final consumers and industry purchasers of materials are reviewed. Next I summarize recent research that estimates the external costs, in dollars per ton, of the materials in solid waste--glass, ferrous metal, aluminum, paper, and plastic. I then combine this information with my own survey data on the prices of consumer products, and the weights of materials contained in those products. Assuming that a tax is set equal to the external costs, this procedure yields the average tax as a percent of price for categories of consumer goods (food, beverages, appliances, etc.). The (tax/price) results are combined with elasticity data to estimate the responses by consumers and industries to imposition of a tax. Such responses include reduced sales of products, less material used per product, conversion from one material to another, and conversion from virgin to recycled materials. Finally, I investigate the impacts of such a tax on households, and ways of mitigating these impacts. The average dollar cost per U.S. household, divided into income quintiles, is estimated. This tax incidence is compared to the incidence of income, sales, and property taxes. I conclude that an externalities tax would significantly affect materials use, principally in those industries where it is a large percentage of costs to consumers and producers. The tax would be regressive, and so equity would require compensating reductions in a tax with similar incidence, such as property taxes.
Subject Area
Economics|Commerce-Business
Recommended Citation
Breslow, Marc Ira, "Regulating solid waste externalities through tax/fee systems" (1993). Doctoral Dissertations Available from Proquest. AAI9316626.
https://scholarworks.umass.edu/dissertations/AAI9316626