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Global Reuse and optimal waste policy

Published online by Cambridge University Press:  10 May 2013

Hide-Fumi Yokoo
Department of International Studies, Division of Environmental Studies, Graduate School of Frontier Sciences, The University of Tokyo, Kashiwanoha 5-1-5, Kashiwa, Chiba, 277-8563, Japan; and National Institute for Environmental Studies, Japan. E-mail:
Thomas C. Kinnaman
Department of Economics, Bucknell University, USA. E-mail:


Electronic waste generated from the consumption of durable goods in developed countries is often exported to underdeveloped countries for reuse, recycling and disposal with unfortunate environmental consequences. The lack of efficient disposal policies within developing nations coupled with global free trade agreements make it difficult for consumers to internalize these costs. This paper develops a two-country model, one economically developed and the other underdeveloped, to solve for optimal tax policies necessary to achieve the efficient allocation of economic resources in an economy with a durable good available for global reuse without policy measures in the underdeveloped country. A tax in the developed country on purchases of the new durable good combined with a waste tax set below the domestic external cost of disposal is sufficient for global efficiency. The implication of allowing free global trade in electronic waste is also examined, where optimal policy resembles a global deposit-refund system.

Research Article
Copyright © Cambridge University Press 2013 

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