This paper examines whether monetary incentives are an effective tool for increasing municipal solid waste sorting. Our theoretical model shows that monetary incentives can be complements to, or substitutes for, households’ intrinsic motivation to sort waste. We empirically investigate this issue, exploiting the exogenous variation in waste management policies experienced during the years 1999–2008 by the 95 municipalities in the district of Treviso (Italy). Using a panel regression analysis, we estimate that pay-as-you-throw (PAYT) incentive schemes increase by 12.3% the sorted-to-total waste ratio and that their effect is complementary to that of a door-to-door (DtD) collection system, which is equal to 15.2%. Moreover, the panel structure of our dataset allows us to estimate learning and spatial effects associated to both PAYT and DtD.
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