CONVEX COMBINATIONS OF RECYCLING INCENTIVES

A general equilibrium model is developed in which consumers turn in a used product when they purchase a new one. A portion of the spent output is recycled, with the remainder going to landfills and causing environmental damage. Tn this tightly constructed model, either a disposal tax on the landfilled waste, or a subsidy for recycling and an excise tax on the disposable good, or any convex combination of these incentives fosters the same efficient allocation of inputs into the production of disposable versus nondisposable goods, the manufacture of virgin raw material, and the reprocessing of used raw material.