Corrective Taxation for Curbing Pollution and Promoting Green Product Design and Recycling

28 Pages Posted: 27 Mar 2001

See all articles by Thomas Eichner

Thomas Eichner

University of Siegen - School of Economic Disciplines

Rudiger Pethig

University of Siegen - School of Economic Disciplines; CESifo (Center for Economic Studies and Ifo Institute)

Date Written: October 2000

Abstract

In this paper we consider a competitive economy with flows of materials from extraction via recycling to landfilling which exhibits distortions due to pollution, external landfilling costs and inefficient product design. The allocative impact of tax-subsidy policies aiming at internalizing the distortions are analyzed when the pertinent tax-subsidy rates were successively raised from zero toward their efficiency restoring levels. Promoting recyclability by greening the product design stimulates recycling as expected. But it also increases primary material extraction and - possibly - the total waste flow, and it reduces the recycling ratio.

Keywords: Green design, pollution, recycling, material

JEL Classification: H22, Q28

Suggested Citation

Eichner, Thomas and Pethig, Rudiger, Corrective Taxation for Curbing Pollution and Promoting Green Product Design and Recycling (October 2000). CESifo Working Paper Series No. 350. Available at SSRN: https://ssrn.com/abstract=263308

Thomas Eichner

University of Siegen - School of Economic Disciplines ( email )

Hoelderlinstrasse 3
57068 Siegen
Germany

Rudiger Pethig (Contact Author)

University of Siegen - School of Economic Disciplines ( email )

Hoelderlinstrasse 3
57068 Siegen
Germany

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

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