• Journal of Environmental Policy
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• v.5 no.4
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• pp.107-126
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• 2006

The voluntary agreement between industries and government on the recycling of wastes has been analysed. The agreement is one of the threatened voluntary agreements. Theoretically these agreements make it possible to fulfill recycling goals with minimized cost. It is the objective of this paper to evaluate the efficiency of the voluntary agreement on recycling wastes by examining of Nash Equilibrium. In the first place, the equilibrium of a bilateral agreement between the representative of industries (association of firms) and government will be analysed to confirm if cost minimization strategies by the association result in a sub-game perfect Nash Equilibrium. This is followed by an analysis of a multilateral agreement among the members of the association to see how the equilibrium and efficiency conditions change. We tried to find some implications that the result of the analysis casts on the environmental policy matters.