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Abstract
Unit pricing is a program in solid waste management that integrates market instruments to encourage households to reduce waste generation and increase recycling. Many studies have shown that unit pricing is effective, especially when the evaluation is based on comparing outcomes before and after implementation. In this paper, we use the so-called difference-in-differences approach to evaluate unit pricing. This approach can provide a less-biased estimation, and can help to examine whether a unit pricing program generates less waste and higher recycling or results in illegal dumping in neighboring regions. Using the fee-per-bag program implemented in Taipei City, Taiwan, as a case study, we found that unit pricing does reduce the amount of garbage but its impact on recycling is not as significant as the current literature suggests. Moreover, the program causes a serious negative externality: more than 60% of the garbage reduction in the city is due to increased dumping of waste in neighboring regions. As the impact of unit‐pricing on recycling is limited, policy-makers cannot rely solely on this program to enhance recycling in the management of municipal solid waste.