Thus, the challenge for municipalities is to ensure that the recycling =
portion of the hauling and diversion remain competitive. If it does, even =
oligopolistic haulers won't be able to suppress incentives for recycling =
and reuse.
One important step in doing this is to require separate bids on the =
recycling and the waste removal portions of their contracts. In this way, =
smaller recycling firms will be able to maintain a foothold in the market =
and constrain the market power of very large combined firms. In addition, =
if municipalities were to work together to establish some standardized =
procurement categories and required reporting formats, the transparency of =
the contracts would be much improved. This would make both the long-term =
costs and the trade-offs among vendors easier to see.
Doug Koplow
Industrial Economics, Inc.
koplow@indecon.com =20
>>> "Okuzumi, Margaret" <okuzumi@cepheid.com> 04/12 4:48 PM >>>
it's certainly not as simple as that. =20
>"This is the culmination of many years of activity," said Neil=20
>Seldman, president of the Washington-based Institute for=20
>Local Self-Reliance, a recycling advocacy group. "The large=20
>companies have spent years driving small haulers out of=20
>business or buying them up."=20
It's part of a long process that is not easily reversed. One point of
the story is that the EPA regulations encouraged this kind of industrial
consolidation, shifting the balance to mega-volume landfills and the
companies that could afford to build them.
We are seeing in many different industries that the costs of entry
become so high for new competitors that it discourages competition.
There is good reason to be alarmed. These large companies have already
invested millions of dollars in creating the landfills, their capital
investment. How could other firms compete? I don't see that many new
landfills could be built, given the glut and the political opposition
they encounter. The problem here is that the corporations who own the
private landfills and haul the garbage are the same. Only if these
functions are performed by independent entities can true free-market
forces prevail. =20
Margaret
> -----Original Message-----
> From: William P. McGowan [SMTP:6500kai@ucsbuxa.ucsb.edu]=20
> Sent: Monday, April 12, 1999 12:31 PM
> To: multiple recipients of
> Cc: GreenYesL
> Subject: Re: [GRRN] WASTE MERGERS MIGHT SLOW RECYCLING
>=20
> A brief lesson in Schumpeterian economics:
>=20
> If a large company reaps windfall profits, ,like many think will
> happen
> in the garbage industry, then these windfall profits will attract
> competition, which in turn creates downward prssure on prices until
> ultimately profits return to historical averages. This has been the
> case
> for one hundred years, and I see no reason why it will not continue
> to be
> so.
>=20
> Bill McGowan
> History, UCSB
> Rincon Recycling
>=20
>=20
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