The Diffusion of Local Differentiated Waste Disposal Taxes in the Netherlands

Pim Heijnen*, J. Paul Elhorst

*Corresponding author for this work

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Abstract

The diffusion of a novel taxing scheme (among Dutch municipalities over the period 1998-2005) is studied in which the waste disposal tax is increasing in the amount of waste a household produces. Inspection of the rise and spread of this tax shows that it is contagious: the probability of introduction is increasing in the number of neighboring municipalities that have already introduced this taxing scheme. A possible rationale is that the tax encourages the dumping of waste in neighboring municipalities. These municipalities may then introduce a similar tax to prevent dumping (spillover effect). Using panel data and a recently developed spatial probit approach (Elhorst et al. in J Appl Econom 32:422-439, 2017), it is possible to distinguish this spillover effect from time-specific effects. The results indicate the presence of strong spillovers.

Original languageEnglish
Pages (from-to)239-258
Number of pages20
JournalEconomist-Netherlands
Volume166
Issue number2
DOIs
Publication statusPublished - Jun-2018

Keywords

  • Waste disposal tax
  • Diffusion
  • Spatial probit
  • Spillovers
  • YARDSTICK COMPETITION
  • STATES

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