The dynamic effects of recycling on oligopoly competition: Evidence from the us paper industry
By: Watkins, Eddie
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Material type: 
BookPublisher: American Economic Journal: Microeconomics Description: 16(3), Aug, 2024: p.176-106.Subject(s): Environment, Consumer Recycling, Intermediate Inputs, Paper Industry, Recycling Technologies, Output Reduction, Rival Costs, Competition, Industrial Economics, Environmental Policy, Strategic Response, Sustainability
In:
American Economic Journal: MicroeconomicsSummary: This paper examines how consumer recycling generates new intermediate inputs that can be used to manufacture substitutes for original products, thereby altering competitive dynamics. Using evidence from the U.S. paper industry, the study finds that firms exposed to future competition from the recycled sector—based on product-specific recycling technologies—reduced output more than firms not exposed, as consumer recycling increased. The analysis highlights how primary sellers strategically respond to recycling by reducing current production and raising rivals’ future costs. The model further illustrates how these strategic responses influence environmental policy, underscoring the need to account for industrial behavior when designing sustainability-oriented regulations. Consumer recycling generates new intermediate inputs. If some of the inputs are used to manufacture a substitute for the original product, the primary seller faces an incentive to reduce current output and raise rivals' future costs. I find that firms in the US paper industry facing exposure to future competition from the recycled sector, based on differences between product specific recycling technologies, reduced output more than firms not exposed to the recycled sector as consumer recycling increased. I then use the model to illustrate how the strategic response to recycling affects environmental policy.- Reproduced
https://www.aeaweb.org/articles?id=10.1257/mic.20200301
| Item type | Current location | Call number | Vol info | Status | Date due | Barcode |
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Articles
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Indian Institute of Public Administration | 16(3), Aug, 2024: p.176-106 | Available | AR133218 |
This paper examines how consumer recycling generates new intermediate inputs that can be used to manufacture substitutes for original products, thereby altering competitive dynamics. Using evidence from the U.S. paper industry, the study finds that firms exposed to future competition from the recycled sector—based on product-specific recycling technologies—reduced output more than firms not exposed, as consumer recycling increased. The analysis highlights how primary sellers strategically respond to recycling by reducing current production and raising rivals’ future costs. The model further illustrates how these strategic responses influence environmental policy, underscoring the need to account for industrial behavior when designing sustainability-oriented regulations. Consumer recycling generates new intermediate inputs. If some of the inputs are used to manufacture a substitute for the original product, the primary seller faces an incentive to reduce current output and raise rivals' future costs. I find that firms in the US paper industry facing exposure to future competition from the recycled sector, based on differences between product specific recycling technologies, reduced output more than firms not exposed to the recycled sector as consumer recycling increased. I then use the model to illustrate how the strategic response to recycling affects environmental policy.- Reproduced
https://www.aeaweb.org/articles?id=10.1257/mic.20200301
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