The Interstate Trade of Trash — An Oligopoly or Perfect Competition?
Humans, in the process of working, working, and enjoying life, create waste. We hardly think about trash once its thrown away, or once picked up for its final trip to the landfill.
I. Five types
Trash is segmented into the following: 1) municipal solids — including recyclables and hazardous materials, food waste, medical waste, clothing, computers, and appliances; 2) garbage — after recyclables have been removed; 3) liquid waste– from farms and factories; 4) hazardous waste — including automotive fluids, fluorescent light bulbs, devices with mercury and oil-based paints, garden chemicals, and cleaning chemicals; and 5) recyclable materials (“Types of waste management,” 2023).
II. Resource Conservation and Recovery Act (RCRA).
Under the Resource Conservation and Recovery Act (RCRA), the Environmental Protection Agency (EPA) regulates household, industrial, and manufacturing solids and hazardous wastes (“Waste,” 2023).
The transport of hazardous waste is controlled by the Pipeline and Hazardous Materials Safety Administration, for which there are stringent compliance steps during the process of identifying, counting, notifying, managing, transporting, and recycling/treating/disposing (“Steps in complying with regulations for hazardous waste,” 2023).
Even if not hazardous, there are other requirements if waste must be stored in underground storage tanks at its destination. Under tight regulatory requirements, states will have to determine the cost of local remediation versus transportation costs — against the backdrop of federal, state, and local regulations.
III. Municipal Solid Waste (MSW) Trade — An Oligopoly or Perfect Competition?
According to WasteDive, in 2022, the U.S. waste and recycling industry was worth an estimated $91B in revenue, up from $82B in 2021. Sixty one percent of the U.S. MSW landfill volume is controlled by five publicly traded companies, twenty seven percent by local government, with the remainder handled by private companies (Rosengren, 2023).
An oligopoly is a market where a few large firms dominate, barriers prevent new entrants, and there are a few substitutes [,] … when the top five firms account for more than 60% of total market sales (Hennerich, 2023). There are only a few substitutes to trash — hoard, recycle, or dispose. In the trash trade, the top five firms control 61% of landfill volume.
However, because there many buyers and many sellers of an identical product, the trash trade could also be considered perfect competition.
IV. Opposition to Trade Vs. the U.S. Constitution
Waste is a problem. Urban areas have limited space. Rural areas do not want them in their backyards. According to Njoku, et al., (2019), landfill operation is usually associated with contamination of surface and ground water [,] … pungent odour, loud disturbing noise from bulldozers, bioaerosol emissions,; volatile organic compounds.
Citizens have expressed concern about being a ”dumping ground,” the impact of landfill growth on local property values, and the limited capacity of local landfills (Ley et al., 2002).
However, federal courts have made it clear that state laws that ban or limit the landfilling or garbage from other states violates the Commerce Clause (Wisconsin Department of Natural Resources, n.d.).
V. Trade Theory.
“One man’s trash is another man’s treasure.” — A. Bebel
According to Cassing and Long (2021), voluntary trade is welfare enhancing if markets truly reflect the social costs. If we ship trash to other places, we will not be burdened by negative effects of the smell, sight, and sound (of birds and animals around landfills). That would be a waste (pun intended).
Why should we stink up our own backyards when we can ship trash somewhere else?
On a global scale, some argue for a reorientation from recycling and reuse — to prevention; however, the resulting reduction in economic activity is not considered an attractive option according to the World Bank (Farrelly, et al., 2016, p. 28).
VI. Externalities and Social Costs.
An externality from either the production or consumption of a good/serve, is a cost or a benefit that is caused by a producer, but is not financially incurred by that producer (Kenton, 2022). In previous studies, the estimate of external costs in the form of air and water pollution and noise was placed at $67 to $75 per ton (Ley et al., 2022, p. 204).
Society has to figure out where to put that trash.
Communities can be lulled into accepting waste easily because the negative social costs may take decades to manifest. For instance, California private businesses and government agencies routinely disposed of contaminated soil at landfills in Arizona and Utah — where environmental regulation and oversight are weaker (Lewis, 2023).
VII. Surcharge, Quantity Restrictions, Combination, and No Trade.
Simulations conducted by Ley et al. (2001) found the following:
VIII. Does the Trash Trade Differ from Other Products?
A. As An Oligopoly.
If viewed as an oligopoly, the trash trade does not differ from other products such as the airline industry where four airlines control 80% of the U.S. market, or the three manufacturers that control 90% of the global insulin market (Hennerich, 2023).
B. As A Perfectly Competitive Market.
If viewed as a perfectly competitive market, where there are many buyers and sellers, and the goods offered by the various sellers are largely the same, the trash trade also does not differ from other products.
IX. Conclusion.
With the trade in trash, urban areas and the suburbs can focus dedicating limited space towards housing, business, and industry. With the payments from the interstate trade in trash, rural communities can increase their revenue base. However, they (local, county, and state government) will have to contend with the consequences well into the future.
Who wins? It’s not about winning or losing.
There are amazing benefits to innovation, invention, and human production. However, there are drawbacks to progress, one of which, is waste.
Would you rather keep your water bottle in a clay jar, or a plastic bottle?
Would you rather ride a horse and buggy all the way across the country to visit relatives, or fly in an airplane?
Copyright Leonard Casiple 2024. All rights reserved.
About the author:
Leonard Casiple is the founder of Public Value LLC, a multidisciplinary company that provides intellectual capital for the public sector.
Leonard is currently enrolled in Northeastern University’s Doctor of Law and Policy program. He earned his education from California Lutheran University (Master of Public Policy and Administration), ASU Thunderbird School of Global Management (Master of Business Administration in Global Management), Excelsior University (BS in Liberal Arts, Ethnic and Area Studies), Academy of Competitive Intelligence (Master of Competitive Intelligence™ and Competitive Intelligence Professional CIP-I Certificates), Defense Language Institute and Foreign Language Center (Arabic Linguist Certificate), and the US Army John F. Kennedy Special Warfare Center and School (Special Forces Engineer Sergeant Course and Psychological Operations Specialist Course).
For more information about the author, see Leo’s LinkedIn Profile
References
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Farrelly, T., Schneider, P., & Stupples, P. (2016). Trading in waste: Integrating sustainable development goals and environmental policies in trade negotiations toward enhanced solid waste management in Pacific Islands countries and territories. Asia Pacific Viewpoint, 57(1), 27–43. https://doi.org/10.1111/apv.12110Links to an external site.
Hennerich, H. (2023, May 17). What makes a market an oligopoly? Federal Reserve Bank of St. Louis. https://www.stlouisfed.org/open-vault/2023/may/what-makes-a-market-an-oligopoly#:~:text=for%20the%20product.-,Oligopoly,similar%20but%20not%20identical%20productsLinks to an external site.
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Rosengren, C. (2023, May 19). US waste and recycling industry worth $91B in 2022, landfill capacity consolidation continues. Waste Dive. https://www.wastedive.com/news/us-waste-recycling-market-waste-business-journal-2023/650693/#:~:text=The%20U.S.%20waste%20and%20recycling,from%20%2482%20billion%20in%202021Links to an external site.
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Wisconsin Department of Natural Resources. (n.d.). Wisconsin’s waste imports and exports. Wisconsin Department of Natural Resources (DNR) | Wisconsin DNR. https://dnr.wisconsin.gov/topic/Landfills/Imports.htmlLinks to an external site.
Edited by Leonard Casiple on Nov 23, 2023 at 1:05pm
