The management of solid waste has become an urgent problem. Product responsibility means that a product will accompany its producer from cradle to grave; prevention, recycling and disposal of waste are part of a theory of the firm which we develop under solid residual management. We assume that the government stimulates firms to enhance recycling of resources by a fee on waste. A comparative statics analysis shows the impact of a fee on waste reduction, on the structure of the production process, on recycling, on input demand, material saving effort, number of firms, and on the amount of waste disposal.
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