Recycling and market power: A more general model and re-evaluation of the evidence

This paper presents a more general model of the "recycling problem" and uses it to re-examine the Alcoa antitrust case of 1945. There are three primary empirical results: 1) in the Alcoa scenario, the recycling problem had been in a steady state since the early 1920's, 2) the primary source of Alcoa's market power, in contrast to previous work, was that most of the aluminum sold by Alcoa was used in goods that were not economical to recycle, and 3) the existing, competitive secondary market was welfare-reducing, relative to a monopoly in all aluminum production. (C) 1999 Elsevier Science B.V. All rights reserved.