Policy Evaluation: Reducing Plastic Bag Usage

Consider the strategic game represented by the payoff matrix below. The first number in each cell is the payoff for Player A, and the second is for Player B.

Statement: Player B has a dominant strategy to choose 'Left'.

A city government implements a $0.10 tax on each single-use plastic bag provided by grocery stores. A study conducted one year later finds a 70% reduction in the use of these bags. The same study, however, notes a 25% increase in the sales of small, disposable plastic trash can liners. Which of the following best analyzes this secondary outcome?

Policy Recommendation for Plastic Bag Waste

Policy Recommendation for Plastic Bag Waste

Economic Rationale for a Plastic Bag Tax

A government imposes a small fee on single-use plastic bags. The primary reason this policy is expected to be effective in reducing bag usage is that the fee makes the bags unaffordable for most shoppers.

A city council is debating two proposals to reduce the consumption of single-use plastic bags. Proposal 1 is to implement a $0.10 tax on each bag, paid by the consumer at checkout. Proposal 2 is to launch a city-wide public information campaign highlighting the environmental damage caused by plastic bags. Based on principles of how economic incentives influence consumer choice, which proposal is more likely to cause a significant and sustained reduction in bag usage, and why?

Previously, a grocery store provided single-use plastic bags to customers at no charge. A new local ordinance now requires the store to charge a mandatory $0.05 fee for each bag. From an economic perspective, how does this small fee primarily influence a shopper's decision to take a new bag?

A municipality is considering two different approaches to discourage the use of single-use plastic bags at supermarkets.

• Policy X: A mandatory 5-cent fee is added to a customer's bill for each new plastic bag they use.
• Policy Y: The price of all groceries is increased by a very small, almost unnoticeable amount to cover the store's cost of providing bags, which remain available at no direct charge to the customer at checkout.

Which policy is predicted to be more effective in changing consumer behavior, and what is the most accurate economic explanation for this prediction?