Suppose that a municipal authority hires a firm to collect and dispose of household waste. The firm is paid a variable fee, proportional to the quantity of waste it collects, and is charged a fee per unit of waste disposed at a municipal waste landfill site. Households are not charged a variable fee for the amount of waste they leave for collection, instead they pay an annual fixed charge. Comment on the economic efficiency of these arrangements and suggest how efficiency gains might be obtained.