DOES GARBAGE PRICING INCREASE ILLEGAL DUMPING OF HOUSEHOLD WASTE?

Abstract Although many theoretical studies have tried to clarify the mechanism of how illegal dumping would arise, there have been no empirical papers directly examining whether garbage pricing increases illegal disposal. Some indirect approaches do not seem to be reliable in term of survey design and estimation strategy for the following reasons: firstly, they did not control endogeneity problems. Secondly, there is a problem when data depends on human sense in indirect approaches. For example, report-based data from a citizen will increase if the citizen believes illegal disposal is deeply problematic. Thirdly, there will be another type of endogeneity, the relationship between crime reporting and police (Levitt, 1998). To overcome the indirect and direct measurement problems, we take notice of the nature of natural experiment, and apply spatial econometrics JEL classification: C23, H23, K42, Q5