Friday, February 24, 2012

Sheboygan Reduced Recycling Subsidies

During the recent Wisconsin state crisis, one of the proposed causalities was that the city of Sheboygan would lose $300,000 in government funds for recycling. In response the city's public works director said they would have to look at collecting those items that they got the most for, which is the typically supply and demand prediction when a subsidy is removed.

In terms of the pure economics of recycling, the supply and demand models predicts that consumer surplus and producer surplus are both decreased, while government expenditures and total economic welfare is increased. Thus the economic conclusion is that society is economically better off with the removal of the subsidy, although consumer and producers are not.

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