1. Some states require that retailers collect (refundable) deposits of a nickel or a dime on every can and bottle they sell. These deposits far exceed the economic value of the can or bottle. How do the deposits affect the incentives of individuals to recycle these products? Is it possible for bottle and can deposits to be too high, in the sense that they induce too much recycling or cause an increase in other undesirable activity? (Hint: Suppose the required deposits were, say $100 for each can or bottle.)

2. Why do many communities mandate recycling? (Hint: Could the incentives facing local governments and recycling companies differ from the incentives facing the average citizen?) Is it possible to induce people to recycle more without requiring that all residents recycle?