DEPOSIT REFUND SYSTEMS FOR ENVIRONMENTAL-MANAGEMENT - EMPIRICAL RESULTS

The theoretical results, obtained in a previous report, on deposit ref und systems are applied to the case of used oil, a large-volume waste stream that has been a problem for environmental regulation over many years. An empirical model is developed that enables the simulation of prices, quantities and net social benefits resulting from the establis hment of a tax-subsidy or deposit-refund system. The model accounts fo r variations in price responsiveness, residual external damages from d isposal, ex ante rates of regulatory compliance, and the level of tran sactions costs implied by the programme. The instrument is shown to of fer positive net social benefits, but only under a constrained range o f conditions. The model is also modified to apply to a generic hazardo us waste problem that emphasizes illegal dumping.