The Effect of Experience and Quantity-Based Pricing on the Valuation of a Curbside Recycling Program
Quantity-based pricing for garbage collection services and recycling programs are becoming increasingly popular methods of meeting municipal solid waste diversion objectives. This article investigates household willingness to pay (WTP) for a pilot curbside recycling program (CRP) in the presence of a quantity-based pricing scheme for garbage collection services, which allows a household to alter their garbage container size at a reduced price. Unlike previous studies that have modeled the simultaneity of these household decisions as a two-step process, we jointly estimate the household's intentions using a full-information maximum-likelihood (FIML) approach. Our results show a strong positive correlation between a household's WTP for a CRP and its stated intention to reduce its garbage container size when a CRP is offered. The positive correlation suggests that WTP will be higher for households which are more likely to reduce their garbage container size. Thus, in the presence of quantity-based pricing, a household's WTP for recycling more fully reflects the marginal social costs of garbage disposal.
Bohara, Alok K., Arthur J. Caplan, and Therese Grijalva. (2007) "The Effect of Experience and Quantity-Based Pricing on the Valuation of a Curbside Recycling Program." Ecological Economics, 64(2), 433-443.