Economic models have demonstrated the efficiency of curbside collection taxes. This paper demonstrates that such efficiencies disappear in economies with centralized recycling options - where recyclable materials can be removed from the waste stream either by households or at a centralized recycling facility. In such economies a curbside garbage tax not only fails to encourage the centralized recycler to internalize the external costs of waste disposal, but introduces inefficiencies to the cost-minimizing mix of household and centralized recycling efforts. The optimal waste policy is a tax assessed further downstream at the landfill rather than at the curb.
Available at: http://works.bepress.com/thomas_kinnaman/19/