Influences of various pricing points: an experimental study of plastic bags in Johannesburg, South Africa

Policymakers have little experience regarding designing the right levels of pricing for plastic bags. The ineffectiveness of charging for bags, in countries such as South Africa, makes it imperative that we map the demand curve. Getting the charge "right" depends on the size of the externa...

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Bibliographic Details
Published in:	Journal of applied economics 2022-12, Vol.25 (1), p.1200-1218
Main Authors:	Dikgang, Johane, Ravat, Zafeer, Mahabir, Jugal
Format:	Article
Language:	eng
Subjects:	Consumers Consumption Contingent behaviour Costs Demand curves Economics Expenditures Externality levy plastic bag Plastics Policy making price Random effects Shopping Tax rates Taxation
Online Access:	Get full text
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Summary:	Policymakers have little experience regarding designing the right levels of pricing for plastic bags. The ineffectiveness of charging for bags, in countries such as South Africa, makes it imperative that we map the demand curve. Getting the charge "right" depends on the size of the externality. Charging for bags is therefore an effective intervention to encourage consumers to carry their own bags to the stores. We employ a contingent behaviour (CB) dataset necessary to estimate the charge level that is likely to lead to a reduction in bag use over time. The results of the random effects Tobit model suggest that the current charge of US$0.03 was found to be too low, and highly inelastic. A charge of US$0.50 has potential to reduce unnecessary plastic use and is still lower than the price of alternatives; therefore, there is no danger of consumers shifting to alternatives that may cause more harm.
ISSN:	1514-0326 1667-6726