In recent years, several jurisdictions worldwide have implemented plastic bag regulations to curb environmentally deleterious effects of plastic bag production and consumption. The problems that each jurisdiction experience vary from place-to-place; as do the policy mechanisms set forth to combat these problems. Documentation of explicit economic rationality regarding these plastic bag regulations is scarce. This thesis sets out to fill some of that void.
The thesis is organized as follows:
Chapter 1 briefly sets forth the goals of the thesis.
Chapter 2 researches current worldwide plastic bag regulation initiatives. Constituents ranging from small towns to large countries, in places ranging from Africa to America to Asia, have implemented regulation. The mechanisms chosen to date are either command and control instruments (such as prohibitions) or market based instruments (such as consumer taxes). This chapter discusses how various jurisdictions regulate plastic bags and why they do so. Chapter 3 examines the economic fundamentals of potential negative externalities arising from plastic bag production and consumption. Empirical information is introduced that helps to discover why consumption externalities should be policy-makers’ ultimate concern. The most important consumption externality, the littering problem, is then introduced. Models that utilize neoclassical economic actors of the Homo Oeconomicus variety show that littering problems can arise due to coordination failure arising from conflicts between social and private interests. The littering problem is shown to display payoff patterns that closely parallel that of a Prisoner’s Dilemma game. The potential externalities arising from the littering problem include aesthetics, biodiversity loss, and human catastrophe. Chapter 4 evaluates in detail alternative regulation strategies to discover if they lead to more efficient outcomes. It is shown that policy justification depends on the behavior of the relevant jurisdiction’s marginal benefit and marginal cost functions. Prohibitions are generally inefficient, but the two countries to date that have implemented prohibitions may still be justified in doing so. The concept of Pigouvian taxation is introduced and it is shown how a Pigou tax might correct an economy that finds itself at an inefficient equilibrium. The final part of Chapter 4 amends the Homo Oeconomicus model by introducing socially contingent moral motivation from the Behavioral Economics field. If consumers have moral preferences then moral norms might in certain cases be internalized so as to achieve the Pareto optimal result. One implication is that multiple equilibrium models exist in which societies can, at least in theory, move from a “bad” equilibrium to a “good” equilibrium where the littering problem disappears. Taxation and public education programs are policy instruments that can stimulate moral motivations.
Chapter 5 analyzes the plastic bag marketplace in Norway and seeks to apply findings from this thesis to the empirical findings regarding that nation. Norway is a high usage plastic bag nation, but the littering problem seems to be virtually non-existent. Finally, the thesis sets out to reconcile and provide possible explanations for why a jurisdiction such as Norway has virtually no littering problem whereas other jurisdictions have such extreme littering problems that they are compelled to implement regulation policies. Chapter 6 concludes and summarizes the results of the thesis.