Municipal Solid Waste, Market Competition and the EU Policy

Two of the main pillars of the EU solid waste policy are the Proximity Principle and the Self-Sufficiency Principle. According to those, waste should be disposed as close as possible to where it has been produced. A likely effect of such provision is to prevent competition from neighbouring areas and increase the market power of local disposers, with possible undesirable consequences for other firms in the vertical chain. We show through a simple spatial model that one additional effect of the Proximity Principle and of the Self-Sufficiency Principle is to provide an incentive to collectors and waste producers to increase the amount of separated waste.