Treat, Dump, or Export? How Domestic and International Waste Management Policies Shape Waste Chain Outcomes.

The article analyzes how domestic and international waste regulations affect firm incentives and compliance in decentralized waste disposal chains characterized by double-sided information asymmetry between waste producers and treatment operators. It models a two-agent waste chain where producers generate high- or low-quality waste (private information) and operators differ in treatment efficiency (also private information), allowing both parties to noncomply via illegal export or local dumping. The study identifies three equilibrium outcomes—breakdown, partial compliance, and full compliance—and finds that focusing enforcement solely on penalizing dumping by operators or restricting low-quality waste exports can backfire, increasing environmental harm by displacing dumping with export or vice versa. Instead, the authors recommend reducing asymmetry in export regulation costs between waste categories and increasing penalties on producers for downstream dumping to better align incentives, reduce environmental harm, and potentially improve waste chain profits. The findings hold under various information structures and highlight the importance of coordinated domestic and international policies tailored to the multiagent nature of waste chains.