Abstract
In this paper, we model international recycling in a two-country model, where firms in a Northern, developed country produce goods (such as electronic equipment) and recycle them, compared to firms in a Southern, developing country, which recycle “post-consumer” products (e-waste) imported from the Northern country. We investigate optimal tax-subsidy scenarios for the following three cases: (1) an on-site disposal economy where international recycling is freely implemented, (2) a return economy where Southern firms’ waste is recycled and returned to the North, and (3) an inactive Southern economy where no policy instruments takes place because of administrative shortages. For each of the above three cases, alternative tax-subsidy systems can maximize the social welfare of both countries, which is called a deposit-refund system.
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Notes
As stated in above, global reuse has been analyzed in previous studies. Although reuse is crucial for resource conversation and for saving final disposal waste, these results will depend upon the utility of second-hand goods. We prioritize clarity as a model in our study.
Subscripts denote (partial) derivatives with respect to the relevant variable.
One may be interested in that firms and consumers organize lobby groups respectively and influence the tax-subsidy rates politically determined. However, unlike the previous study in this line (e.g., Fredriksson 1997), there are many variables about the firms, consumers, and governments in our model. Unfortunately, we cannot analytically solve such expansion.
For the space limitation, we omit FOCs for each maximization problems throughout the paper. They are available upon request.
If the sign of the above term is negative, more recycling would generate an additional benefit that exceeds social cost. This cannot occur in an optimum condition.
Actually developed countries pay attention to the environment of developing countries, regulating the export of e-waste and others on the basis of the Basel Convention and its corresponding domestic law.
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This research is financially supported by JSPS KAKENHI Grant No. 16K03662. The author thanks Professor Kyoko Hirose, Hideo Koide, and Masakazu Maezuru for their helpful comments.
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Honma, S. Optimal policies for international recycling between developed and developing countries. Lett Spat Resour Sci 12, 143–153 (2019). https://doi.org/10.1007/s12076-019-00233-1
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DOI: https://doi.org/10.1007/s12076-019-00233-1