Advertisement

Optimal Waste Disposal Fees When Product Durability is Endogenous: Accounting for Planned Obsolescence

  • Hiroshi Kinokuni
  • Shuichi Ohori
  • Yasunobu Tomoda
Article

Abstract

Considering the Coase conjecture (J Law Econ 15:143–149, 1972), we explore the optimal disposal fee of solid waste through the choice of product durability by a producer. We find that introducing a disposal fee curbs planned obsolescence and increases product durability. This increased durability decreases the social cost of waste and increases the service flow from the durable product. Therefore, the optimal disposal fee is higher than the Pigouvian level in the closed-loop.

Keywords

Solid waste management Design for environment Disposal fee Durability choice Planned obsolescence 

Notes

Acknowledgements

We are grateful to the editor, the two anonymous referees, Masanobu Ishikawa, Tomomichi Mizuno, Akihisa Shibata, Takayoshi Shinkuma, Kenji Takeuchi, Tomoki Fujii, and Makoto Yano. This research was supported by MEXT/JSPS KAKENHI Grant Numbers 26380338 and 26380344.

References

  1. Bond E, Samuelson L (1984) Durable good monopolies with rational expectations and replacement sales. RAND J Econ 15:336–345CrossRefGoogle Scholar
  2. Bulow J (1982) Durable-goods monopolists. J Polit Econ 90:314–332CrossRefGoogle Scholar
  3. Bulow J (1986) An economic theory of planned obsolescence. Q J Econ 101:729–749CrossRefGoogle Scholar
  4. Calcott P, Walls M (2000) Can downstream waste disposal policies encourage upstream “design for environment”? Am Econ Rev Pap Proc 90:233–237CrossRefGoogle Scholar
  5. Calcott P, Walls M (2005) Waste, recycling and ‘Design for environment’: roles for markets and policy instruments. Resour Energy Econ 27:287–305CrossRefGoogle Scholar
  6. Coase R (1972) Durability and monopoly. J Law Econ 15:143–149CrossRefGoogle Scholar
  7. Dubois M, Eyckmans J (2015) Efficient waste management policies and strategic behavior with open borders. Environm Resour Econ 62:907–923CrossRefGoogle Scholar
  8. Fethke G, Jagannathan R (2002) Monopoly with endogenous durability. J Econ Dyn Control 26:1009–1027CrossRefGoogle Scholar
  9. Fleckinger P, Glachant M (2010) The organization of extended producer responsibility in waste policy with product differentiation. J Environ Econ Manag 59:57–66CrossRefGoogle Scholar
  10. Fullerton D, Wu W (1998) Policies for green design. J Environ Econ Manag 36:131–148CrossRefGoogle Scholar
  11. Guiltinan J (2009) Creative destruction and destructive creations: environmental ethics and planned obsolescence. J Bus Ethics 89:19–28CrossRefGoogle Scholar
  12. Hendel I, Lizzeri A (1999) Interfering with secondary markets. RAND J Econ 30:1–21CrossRefGoogle Scholar
  13. Ino H (2011) Optimal environmental policy for waste disposal and recycling when firms are not compliant. J Environ Econ Manag 62:290–308CrossRefGoogle Scholar
  14. Kinokuni H (1999) Repair market structure, product durability, and monopoly. Aust Econ Pap 38:343–353CrossRefGoogle Scholar
  15. Kinokuni H, Ohkawa T, Okamura M (2010) Planned antiobsolescence occurs when consumers engage in maintenance. Int J Ind Organ 28:441–450CrossRefGoogle Scholar
  16. Requate T (2006) Environmental policy under imperfect competition. In: Tietenberg T, Folmer H (eds) The international Yearbook of Environmental and Resource Economics 2006/2007, Cheltenham, UK and Northampton, MA, USA: Edward Elgar, pp 120–207Google Scholar
  17. Runkel M (2003) Product durability and extended producer responsibility in solid waste management. Environ Resour Econ 24:161–182CrossRefGoogle Scholar
  18. Shinkuma T (2007) Reconsideration of an advance disposal fee policy for end-of-life durable goods. J Environ Econ Manag 53:110–121CrossRefGoogle Scholar
  19. Swan P (1970) Durability of consumption goods. Am Econ Rev 60:884–894Google Scholar
  20. Swan P (1971) The durability of goods and regulation of monopoly. Bell J Econ Manag Sci 2:347–357CrossRefGoogle Scholar
  21. Waldman M (1996) Durable goods pricing when quality matters. J Bus 69:489–510CrossRefGoogle Scholar
  22. Waldman M (2003) Durable goods theory for real world markets. J Econ Perspect 17:131–154CrossRefGoogle Scholar

Copyright information

© Springer Science+Business Media B.V., part of Springer Nature 2018

Authors and Affiliations

  1. 1.Faculty of EconomicsRitsumeikan UniversityKusatsuJapan
  2. 2.Faculty of InformaticsKansai UniversityTakatsukiJapan
  3. 3.Kobe City University of Foreign StudiesKobeJapan

Personalised recommendations