Examination on The Optimal behavior of Consumers in a Deposit-Refund System

Abstract

In this paper, we examine the optimization behavior of comsumers in a Deposit-Refund System from an economic point of view. It is usually considered that if some kind of deposit-refund system is introduced into a market of drinks in cans at community, the consumers will reduce the consumption of the drink and increase the recycle of the cans.
These explanations are based on the facts that the prices of the drinks rise, and the profit of consumers can be increased by recycles.
However, if the consumers maximize not only their utilitis but allso their profits (=revenues-costs), they will not reduce the consumption of the drinks, because the total incomes (=income+profits) of the consumers are not changed even after the introduction of a deposit-refund system. In other words, the deposits of the drinks are returned as the refunds of cans.
However, even if all the deposits are returned to the consumers, the consumers will not consume the same volume of drinks as when no deposit is imposed, because the consumers must pay the costs of recycling.
The conclusion is that the introduction of a deposit-refund system will promote the recycling activities, but the activities will stop in a while as the costs of recycling activities exceed the revenues from the refund of cans.