Waste Recycling under Take-back and Tax/Subsidy Mechanisms

In the implementation of extended producer responsibility (EPR) principle on waste management, some countries use a take-back mandate mechanism in which manufacturers bear responsibility to recycle their products till they reach a mandated recycling rate level. Other countries follow a tax/subsidy mechanism in which manufacturers pay an advance disposal fees; the government intervenes in transferring the payment received from manufacturers to subsidize the recycling sector. The purpose of this paper is to compare the relative performance of these two EPR mechanisms on the waste recycling rate. We found that when the recycling technology is relatively efficient, the recycling rate is higher under the tax/subsidy mechanism than the take back mandate mechanism. This result is reversed when the recycling technology becomes less efficient.