Abstract
Governments around the world have introduced an efficient garbage management system for environmental protection and productive land use. Using the case of South Korea, this study examines how the unit pricing by the bag (UPB), as a Pigouvian tax, affects waste disposals. We supplement the extant literature by expanding the scope to one country with municipal-level units across years, applying new control variables, and conducting heterogeneous estimations. The results indicate that the effects of the UPB are realized within the intensive margin and that the policy induces eco-friendly behaviors by reducing landfill garbage and increasing recycling; however, the total volume of waste disposals is not affected. These effects are more noticeable in the case of high price elasticity of demand for waste disposals, suggesting a possibility of price discriminatory policies.

Keywords: Pigouvian tax; unit pricing; waste disposal; landfill; recycling.

JEL Codes: H31, H71, Q38, Q53