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Corrective Policies for externalities

Many municipalities use a form of "unit-pricing" for residential garbage collection. The exact form of this pricing varies, but most often includes (bag-tag) programs that require households to purchase clear bags and tag garbage bags as a precondition of pickup. Most of the empirical evidence surrounding these bag-tag programs suggests that the estimated price elasticity of demand for garbage collection is low (approximately -0.10) and that the administrative costs of these programs are large. Critique the effectiveness of these programs in forcing consumers to internalize the externalities generated by solid waste disposal.

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