Deposit-Refund Systems : Theory and Applications to Environmental, Conservation, and Consumer Policy

"Professor Bohm has produced a unique volume, which, for the first time, offers comprehensive coverage of the theory of the costs and benefits of placing money deposits on products which can be refunded when the product is returned for recycling or some form of safe disposal. He demonstrates that the deposit-refund systemis likely to operate at lower social cost than regulation or subsidy to achieve the same effect. Various types of system are analyzed--e.g. producer initiated systems designed to improve profitability via price discrimination, accelerated product replacement or plain stimulus to demand, and government initiated systems in contexts where markets are imperfect. He carefully traces out who gains and who loses from such systems. He also formalizes the requirements for setting the 'optimal' refund rate based on externalities avoided. These theoretical considerations are placed in an empirical context by considering some of the actual deposit-refund systems in existence. He concludes, rightly, that all such systems can be improved, and also shows the use of such systems for control of chloro-fluoromethanes and for the more general case of consumer protection. What might appear as a fairly esoteric work, then, can be seen to have wide application to environmental controls in general, and to consumer legislation. Bohm's work deserves a wider audience than it is likely to get and the author is to be congratulated on the production of this volume." -- The Economic Journal