Deposit-refund system

From Wikipedia, the free encyclopedia
Jump to: navigation, search

A deposit-refund system' (DRS), or advance deposit fee, is a surcharge on a product when purchased and a rebate when it is returned. A well-known example is when container deposit legislation mandates that a refund is given when reusable packaging is returned. Deposit-refund system are a market-based instrument to address externalities. As with Pigovian taxes a DRS aims to limit pollution of various types by creating an incentive to return a product.[1]

While most commonly used with beverage containers it can be used on other materials including liquid and gaseous wastes.[2] Deposit-refund systems are used on products such as batteries, tyres, automotive oil, consumer electronics and shipping pallets.

There are three potential advantages of a DRS: prevents illegal dumping by giving a financial incentive, monitoring and enforcement is made easier, and evading the costs is difficult.[1]

Deposit-refund systems can be both voluntary or mandated by legislation.

See also[edit]

References[edit]

  1. ^ a b Walls, Margaret (November 2011). "Deposit-Refund Systems in Practice and Theory". RFF DP 11-47. Resources for the Future. Retrieved 22 August 2012. 
  2. ^ Fullerton, Don; Wolverton, Anne (January 2000). "Two Generalizations of a Deposit-Refund System". NBER Working Paper No 7505. National Bureau of Economic Research. Retrieved 22 August 2012.