University / Organisation : Paris Dauphine University - PSL

Paper or project ? paper

Title : Signaling in the Dark: Why Producer Responsibility Organizations Fail to Incentivize Eco-Design under EPR

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Abstract : Extended Producer Responsibility (EPR) schemes aim to internalize environmental externalities by making producers financially and operationally responsible for the end-of-life management of their products. While individual compliance models offer strong incentive properties, most EPR systems rely on collective arrangements administered by Producer Responsibility Organizations (PROs). This chapter adopts an organizational lens to analyze why PROs, despite their operational advantages, structurally fail to generate effective incentives for eco-design. We show that organizational mechanisms such as pooled financing, standardized fee schedules, and decoupling between producers and waste operators create an informational lock-in that disables cost attribution and producer differentiation. These constraints result in a pooling equilibrium that neutralizes incentive signals. We then explore the theoretical conditions for introducing a separating equilibrium within collective systems, drawing on contract theory and signaling models. Our contribution lies in reframing the incentive failure of PROs as an endogenous consequence of organizational design, and in proposing new research directions on meta-organizational forms capable of reconciling mutualization with strategic differentiation.