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.
rate, Fixed and Random effects, Endogenous variables, Sample selection bias.