The Evaluation of the Protection Policy for Domestic Recycling of Iron and Steel Scraps :

Quantitative Analysis with a Japan-China Applied General Equilibrium Model

Abstract

In recent years, the iron and steel scraps generated in Japan have increasingly exported to China, which causes price hike of the scraps. As the electric furnace manufacturer in Japan makes crude steel from iron and steel scraps mainly, it has been facing rising production cost. The purpose of this paper is to evaluate two policy options for maintaining domestic recycling system, the tax reduction for electric furnaces manufacturer and the export taxation for the scraps. The evaluation is done by using a Japan-China Applied General Equilibrium (AGE) model. The results of the evaluation suggest that the tax reduction policy causes the price hike of the scraps and makes recycling difficult for other industries. On the other hand, the export taxation lowers the domestic price of the scraps and makes recycling less difficult for other industries.