In 1994, the European Union approved the Packaging and Packaging Waste Directive (Directive 94/62/EC) having as a primary goal to mandate the adoption of national legislation targeted at the increase of recovery and recycling goals by member States. In spite of the flexibility allowed by the EU in choosing the path towards goal attainment, a significant number of countries adopted voluntary agreements generally known as Green-Dot consortia.
The main research question reflects this concern over the dominant governance structure adopted, the Green Dot agreements: Did voluntary agreements improve the performance of national recycling systems or did they favour collusion practices that dominate the industry, impose barriers to entry by new firms, and generate social welfare losses?
The paper discusses the alternative governance structures to manage packaging waste (command-and-control regulation, market-based instruments, and voluntary agreements) and focuses on the economic transaction costs entailed by each of these alternative solutions. It is stressed that proper institutional design is crucial in order to minimize these transaction costs and improve the degree of efficiency of these governance structures
