Suppose a town concludes that its costs on average is $30.00 per household to manage the disposal of the waste generated by households each year. The town is debating two strategies for funding this cost: (1) requiring a sticker on every bag disposed of such that the total cost of the stickers for the average number of bags per household per year would be $30 or (2) including the $30 fee in each household's property taxes each year.

a) Assuming no illegal disposal what approach would tend to be more efficient? Why?

b) How would the possibility of rampant illegal disposal affect your answer? Would a deposit-refund on some large components of the trash help to reduce illegal disposal? Why or why not? What are the revenue implications to the town of establishing a deposit-refund system?

Suppose a town concludes that its costs on average is $30.00 per household to manage the disposal of the waste generated by households each year. The town is debating two strategies for funding this cost: (1) requiring a sticker on every bag disposed of such that the total cost of the stickers for the average number of bags per household per year would be $30 or (2) including the $30 fee in each household's property taxes each year.

a) Assuming no illegal disposal what approach would tend to be more efficient? Why?

b) How would the possibility of rampant illegal disposal affect your answer? Would a deposit-refund on some large components of the trash help to reduce illegal disposal? Why or why not? What are the revenue implications to the town of establishing a deposit-refund system?