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 . . . . . . . . . . . .

Friday, December 31, 2004

Pay As You Throw
Garbage Collection Services

My earlier posting about the 17-cents per bag tax on plastic grocery bags being considered in San Francisco sparked some interest on other blogs.

Bill Sjostrom, of the Atlantic Blog, wrote:
Ireland introduced a 15 cent (currently about 20 cents US) tax on plastic shopping bags in 2002. I do not know what happened to landfill, but the effect on litter was remarkable. Frank Convery and Simon McDonnell of the Department of Environmental Studies at University College Dublin claim, on the basis of a survey of unidentified retailers, that plastic bag use dropped between 89% and 99%. On the basis of the casual evidence of being the family shopper, I almost never see anyone taking bags; they almost always bring their own.
which was what I did not say nearly so well in my initial posting --- the price elasticity of demand for plastic grocery bags is so high that a 17-cents per bag tax might very well reduce their sale so much that it would likely become inefficiently low.

He also pointed out that when people bring their own bags to a grocery store, shop-lifting increases. Damn, isn't it interesting how "people respond to incentives"?

At SCSU Scholars, King Banaian wrote
We have a per bag fee for putting out garbage in St. Cloud; a green, labeled Hefty costs $2 each. This has encouraged a great deal of recycling, and more than a little searching by some for dumpsters at apartment buildings and businesses. A couple of grocery stores which have you bag your own groceries sell tote boxes; these are not very popular items as best I can tell.

We also have "Pay As You Throw" garbage collection here in Clinton, Ontario, a town of 3200 people. Furthermore it is absolutely and totally private, and, as a result, there are two different companies offering garbage collection on different days of the week. As I wrote in an editorial for the National Post back in May, 2001, the system is terrific.

Since I wrote that article, the "tipping fee" at the local landfill has increased, and so our garbage fees have increased to $2/bag. Also, as I predicted then, one of the three companies initially serving the town no longer does; but it is profitably serving other towns nearby, and so it can enter quickly, should the existing duopoly collude to raise prices.
Who Links Here