Cited by 134Merger and Competition AnalysisEconomic Theory and InstitutionsMunicipal Solid Waste Management

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The Strange Case of Dr. Jekyll and Mr. Hyde

Open access
OISHI, Yasuhiko·2001·Studies in Regional Science

Abstract

First this paper indicates the fault common to the analysis given by three professors as to the Deposit-Refund System, and then provides a (much better?) alternative model for Deposit-Refund Theory. In their papers, all three professors have adopted two-stage construction. In the first stage the economic subject demands soft-drink cans following the utility-maximizing rule qua consumer (Jekyll), and then, in the second stage, he suddenly turns into entrepreneur (Hyde) and pursues his profit following the marginal cost-price rule, completely independent of the former behavior. (In Prof. Fujioka's paper, he firstt appears as Hyde. Then transformation into Jekyll!) Their analyses only place a utility-maximizing behavior and a profit-maximizing behavior in juxtaposition completely independent of each other. Such dissociation should not be overlooked. Alternatively a simple (and much better?) model of a unified Deposit-Refund Theory is proposed, which incorporates toil and trouble attendant on refunding into utility function as disutility, together with including the refunded money into the budget equation.

Overview

AI snapshot

Written from the paper’s full text.

TL;DR

This article criticizes earlier Deposit-Refund analyses by Shibata, Ueda, and Fujioka for splitting household behavior into a utility-maximizing consumer and a separate profit-maximizing recycler, and proposes a unified household model instead. The alternative model treats the effort of returning empty cans as a disutility inside the utility function and derives a modified marginal-utility condition.

Key findings

  • The three prior analyses share a two-stage “Jekyll-Hyde” structure: first the household demands canned drinks according to utility maximization, then it switches to profit maximization for the refund decision, with the two stages treated as independent; the author argues this dissociation is theoretically unacceptable.
  • In Fujioka’s model, profit maximization appears as a constraint, π* = max{θyr − C(yr)}, so π* is a fixed maximum value entering the budget equation; the author contends this still separates the refund decision from utility and that simultaneous maximization of utility and profit is logically impossible.
  • The proposed alternative is max u = u(x, y, f(x2)) subject to x = x1 + x2 and I = (p + α)x1 + px2 + qy, where x1 is cans not refunded, x2 is cans refunded, and f(x2) captures the disutility of refunding effort; the Lagrangian yields a weighted marginal-utility equalization condition.
  • Minor criticisms include that Shibata’s “bent supply curve PHA” and the demand-supply intersection at K are misleading because the marginal recovery cost curve PB is the supply of empty cans from the “Hyde” side, not the supply of canned drinks; the rationale for increasing marginal recovery cost is also questioned, and endpoint solutions are noted if that curve is flat or downward sloping.

Methods

  • Theoretical and mathematical economics critique with model construction; no empirical data, sample, or estimation are used.
  • The paper reviews and critiques prior works by Shibata and Shibata (1988), Ueda (1996), and Fujioka (1998), using their figures and models as the objects of analysis.
  • It formulates a constrained utility-maximization problem, forms a Lagrangian, derives first-order conditions for subjective equilibrium, and suggests comparative statics such as a Slutsky-type equation as a possible extension.

Limitations

  • The author states that his critique may rest on mistaken understanding and may contain mistaken criticisms, and he invites correction from the three professors and colleagues.
  • The critique of Fujioka is explicitly limited to Model I; later parts of Fujioka’s analysis are left neutral and reserved for future examination.
  • The proposed alternative model is described as very simple, and the author notes that other formulations of Deposit-Refund theory are possible; evident from the text, the paper offers no empirical testing or welfare calibration.

Model-written summary. Check it against the paper before relying on it.

Integrity signals

Registry

Crossref · 10.2457/srs.32.139

Cites

Statistics

Nothing to recompute.

Verification

Claims the paper makes

23 Sources not found · 10 Own interpretation · 7 Own result · 3 No basis given

Show all 9 claims

  • It may state two separate claims as one. 10
  • Probably not a substantial claim. 31
34 of 34

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Metadata

Authors
OISHI, Y.
Affiliations
The University of Tokyo (JP)
Corresponding author
OISHI, Yasuhiko
Venue
Studies in Regional Science
Published
2001
Volume
32
Issue
1
Pages
139-154
ISSN
  • 0287-6256 (ISSN-L)
  • 1880-6465
OpenAlex
W4236930795
Cited by
134
References
0
Citations by year
2024: 6 · 2023: 19 · 2022: 4 · 2021: 4 · 2020: 6 · 2019: 19 · 2018: 4 · 2017: 5 · 2016: 5 · 2015: 9 · 2014: 2 · 2013: 4 · 2012: 6
FWCI
0.89
Type
journal article
Language
en
Open access
Locations
Studies in Regional Science (publishedVersion)
Topics
  • Social Sciences › Economics, Econometrics and Finance › Economics and Econometrics › Merger and Competition Analysis
  • Social Sciences › Economics, Econometrics and Finance › Economics and Econometrics › Economic Theory and Institutions
  • Physical Sciences › Environmental Science › Waste Management and Disposal › Municipal Solid Waste Management
Keywords
deposit-refund systems, recycling, consumer behavior, profit maximization, utility maximization, two-stage model, waste management

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