Efficient Take‐Back Legislation

Abstract

Product and waste take‐back is becoming more regulated by countries to protect the environment. Such regulation puts an economic burden on firms, while creating fairness concerns and potentially even missing its primary target: environmental benefits. This research discusses the economic and environmental impacts of extended producer responsibility type of legislation and identifies efficiency conditions. It is shown that the right policy would (i) make producers responsible for their own waste to avoid fairness concerns and (ii) favor eco‐design producers to create stronger environmental benefits. Furthermore, the efficiency of take‐back systems is also driven by environmental classification of products, industry structure, and end‐user willingness to participate in take‐back programs.