Monday, June 11, 2012

Recycling tourism

In areas where waste collection is paid by the one creating the waste, it is obvious that people are going to try to shop for the best option. In some cases, that option is illegal waste dumping, which leads to the unfortunate creation of trash police forces. But except for this the latter unfortunate turn of events, there is nothing wrong with price competition for trash.

Except when these prices are subsidized by municipalities, and they then complain that people from other municipalities use their services. Simon De Jaeger and Johan Eyckmans look at such trash and recycling tourism in Flanders, where this is believed to be a major issue facilitated by the fact that pricing methods vary widely from facility to facility. They build a choice model of where households would bring their trash given prices and estimate it with spatial econometric techniques. The average price in neighboring municipalities is used to capture waste tourism, but I think the lowest price, not the average one, should be used. Maybe this is why De Jaeger and Eyckmans find no evidence for tourism except for bulky household trash.

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