1、Chapter 8Recyclable Resources:Minerals,Paper,Glass,Etc.8.1 IntroductionQuestions to be resolved:What is an efficient amount of recycling?Will the market automatically generate this amount in the absence of government intervention?How does the efficient allocation over time differ between recyclable
2、and non-recyclable resources?8.2 An Efficient Allocation of Recyclable ResourcesHow would an efficient market allocate a recyclable depletable resource?In the earliest periods,reliance would generally be exclusively on the virgin ore,because it is cheapest.As more concentrated ores are extracted,the
3、 mining industry would turn to the lower-grade ore and to foreign sources for higher-grade ores.As the costs of virgin materials and of waste disposal rises,the attractiveness of recycling is increasing.8.2 An Efficient Allocation of Recyclable ResourcesConsumers,as well as manufacturers,play a role
4、 on both the demand and supply side of the market.8.2 An Efficient Allocation of Recyclable ResourcesOn the demand side,consumers would find that products depending exclusively on virgin raw materials are subject to higher prices than those relying on recycled materials.Then,consumers would have a t
5、endency to switch to products made with the cheaper,recycled raw materials,as long as quality is not adversely affected.8.2 An Efficient Allocation of Recyclable ResourcesOn the other hand,as long as consumers bear the cost of disposal,they have the additional incentive to return their used recyclab
6、le products to collection centers.By doing so,they avoid disposal costs,while at the same time reaping financial rewards for supplying a product someone wants.8.2 An Efficient Allocation of Recyclable ResourcesIn most cases recycling is not cheap.Transport and processing costs are usually significan
7、tAs recycling becomes cost-competitive,rather dramatic changes occur in the manufacturing process.Not only do manufacturers rely more heavily on recycled inputs,they also begin to design their products to facilitate recycling.8.2 An Efficient Allocation of Recyclable ResourcesHow does the efficient
8、allocation of a recyclable resource over time compare with that of a nonrecyclable resource?Perhaps the most important difference occurs in the timing of the switch point.As long as the resource can be recycled at a marginal cost lower than that of the substitute,the market tends to rely on the recy
9、clable resource longer than it does on a nonrecyclable resource with an identical extraction cost curve.8.2 An Efficient Allocation of Recyclable ResourcesAn efficient economic system will orchestrate a balance between the consumption of depletable and recycled materials,between disposing of used pr
10、oducts and recycling,and between imports and domestic production.8.3 waste Disposal and Pollution Damage9.3.1 Disposal Cost and Efficiency9.3.2 The Disposal Decision9.3.3 Disposal Costs and the Scrap Market9.3.4 Public Policies9.3.5 Pollution Damage8.3.1 Disposal Cost and EfficiencyBoth marginal dis
11、posal costs and the prices of recycled materials directly affect the efficient level of recycling.8.3.2 The Disposal DecisionPotentially recyclable waste can be divided into two types of scrap:Old scrap which is recovered from products used by consumers.New scrap which is composed of the residual ma
12、terials generated during production.8.3.2 The Disposal DecisionThe market for new scrap will work efficiently and effectively.Since new scrap never leaves the factory,it remains under the complete control of the manufacturer.Manufacturer has an incentive to design the product with the use of scrap i
13、n mind.8.3.2 The Disposal DecisionThe market for old scrap works inefficiently because the product users do not bear the full marginal social costs of disposing of their product.As a result,the market is biased away from recycling old scrap and toward the use of virgin materials.Figure 9.18.3.2 The
14、Disposal DecisionWhen the private marginal cost of disposal is lower than the marginal social cost of disposal,the market level of recycling is inefficient.Only if all social costs are included in the marginal cost of disposal will the efficient amount of recycling be attained(Qs).Figure 9.28.3.3 Di
15、sposal Costs and the Scrap MarketHow would the market respond to a policy forcing product users to bear the true marginal disposal cost?8.3.3 Disposal Costs and the Scrap MarketThe major effect would be on the supply of materials to be recycled.Consumers would now be able to avoid disposal costs and
16、 might even be paid for discarded products.This would cause the diversion of some materials to recycling centers,where they could be reintegrated into the materials process.Figure 9.38.3.4 Public PoliciesCan the misallocation resulting from inefficiently low disposal cost be corrected?Volume pricing
17、 would impose disposal charges reflecting the true social cost of disposal.Refundable deposit is designed to involve the initial charge and the refund.Tax system can be used to promote recycling by taxing virgin materials and by subsidizing recycling activities.8.3.5 Pollution DamageOne other situat
18、ion influences the use of recycled and virgin ores.When environmental damage results from extracting and using virgin materials and not from the use of recycled materials,the market allocation will be biased away from recycling.8.3.5 Pollution DamageSuppose that the mining industry was forced to bea
19、r the cost of this environmental damage.What difference would the inclusion of this cost have on the scrap market?8.3.5 Pollution DamageThe internalizing of this cost results in a leftward shift in the supply curve for the virgin ore in figure 9.3.This would,in turn,cause a leftward shift in the total supply curve.The market would be using less of the resource-due to higher price-while recycling more.
