We analyze how implementation of a market-based program of optimal recycling can be pursued and used to promote environmental quality. Presently in the U.S. economy, due to the relatively low private monetary costs of solid waste disposal, households and firms have little or no incentive to undertake recycling. As a result, most current recycling programs are apt to yield less than efficient outcomes. The paper offers a model for achieving an optimal level of recycling, and applies a combination of time-series and cross-sectional data to analyze and verify the potentials of an optimal recycling policy initiative toward an enhanced environmental management.
JEL classification numbers: C33, Q24, Q28.
Keywords: Recycling rate, Fixed and Random effects, Endogenous variables, Sample selection bias.
ISSN: 1792-7552 (Online)