Toward waste management contracts

This paper deals with the cost of treatment of the ultimate waste, that is waste which cannot, in the absence of recycling opportunities, be reduced by a suitable taxation scheme. We propose a new way to handle this waste based on aWaste Management Contracts (WMC) which largely implicates the households in the cost reduction process. Within a set of feasible, i.e. budget balancing, incentive compatible and acceptable, contracts we characterize the optimal WMC and compare this system to a more standard one based on an Advanced and a Disposal Fee