On Second-best Policing Effort against the Illegal Disposal of Recyclable Waste

In this paper, we construct a partial equilibrium model of a product that can be manufactured by using a recycled material as well as a virgin natural resource. In particular, we consider the possibility that a household may resort to the illicit disposal of its waste, such as midnight dumping, instead of discarding it properly. Our focus is on conducting a comparative static analysis on the second-best level of the governmentfs policing effort to counter illegal disposal. More specifically, we examine how the government should adjust the effort level in response to changes in the environmental damage cost of illegal disposal and exported waste.