The trade of polyethylene waste: prices or policies?

We contribute to the theoretical and empirical literature on waste trade, with a focus on the secondhand market of plastic materials. To do this, we take two main steps: we first model a two-country setting with an exporting and an importing country, to derive testable predictions on how their main economic, policy and institutional features are expected to affect waste flows across countries. Then, we rely on a negative binomial regression model to test our theoretical results using data on international trade of polyethylene waste. Empirical results do not reject theoretical predictions, although some exceptions arise. A first striking result is that exporting prices do not seem to matter in export flows. Also, relying more on landfilling and recycling negatively affects exports, suggesting complex interactions among waste management and export patterns. Finally, we conclude that legal rights enforcement in exporting countries does not affect waste trade. A ‘‘pollution haven’’ hypothesis is however indirectly suggested by the negative link between wages in the importing countries and the amount of exported waste.