Incentives for solving the scrap tire problem through existing markets

Abstract

The nature and causes of the scrap tire problem are examined from the viewpoint of the discipline of economics rather than a technological perspective. State governmental responses to the problem and commonly proposed remedies are briefly reviewed and the nature of the tire market's failure to prevent the scrap tire problem is examined in order to gain insight into effective and efficient corrections, without involving direct governmental participation in funding of recycling, market development and technology selection. Those functions remain in the private sector. The role of government suggested is the traditional one: that of setting the market “rules of the game”. A completely market-based mechanism involving a tire disposal fee that remains wholly in the private sector is developed for dealing with new scrappage and a method is suggested by which to calculate a cost-effective disposal fee. This article will be of interest to state and local environmental officials concerned with the tire problem and who wish an understanding of the fundamental causes of the problem.