ABSTRACT
This paper examines the sources of externalities associated with post-consumer waste. A paradigm economy is constructed to compare the market and real income effects of disposal charges, recycling subsidies, user fees, and litter taxes with those of the status quo policy. The supply and demand equations of the general equilibrium system are derived and simulations are performed for each policy. Under certain assumptions, including zero transactions costs, it is concluded that real income can be maximized with a disposal charge policy, which is also the only innovative policy to assure no reduction of real income compared to the status quo, regardless of production technologies. User fees and litter taxes are found to be the next most desirable; and recycling subsidies, the least.
