Economics and the mid-life crisis have much in common: Both dwell on foregone opportunities

C'est la vie; c'est la guerre; c'est la pomme de terre . . . . . . . . . . . . . email: jpalmer at uwo dot ca

. . . . . . . . . . .Richard Posner should be awarded the next Nobel Prize in Economics . . . . . . . . . . . .

Tuesday, December 28, 2004

17 Cents for a Grocery Bag?
We Must be in California

The City of San Francisco is considering charging a 17-cents-per-bag levy on grocery bags to discourage their use and disposal. (See here for details [registration required] ).

I'm all in favour of considering user fees when an activity imposes negative externalities, but this seems extreme. First, I'm not sure how big the externalities from grocery bags are -- where I live, most people recycle the plastic grocery bags, and it is difficult to think of re-cycled bags as meriting a user fee.

Second, I suspect the price elasticity of demand for plastic garbage bags is so high that a 17-cent charge is much higher than the efficient charge. My ad hoc observations from stores that charge only two cents per bag is that LOTS of people bring their own bags when they go shopping.

Policy makers who ignore elasticities are quite likely to make bad policy.
Who Links Here