Political Interventions to Reduce Single-Use Plastics (SUPs) and Price Effects: An Event Study for Austria and Germany

Imagine you are walking through a supermarket in Austria or Germany. You pick up a plastic balloon or a disposable coffee cup. In the past, the price tag on these items only covered the cost of making the plastic and shipping it. But starting in 2022 (in Austria) and 2024 (in Germany), the government decided to add a "cleanup fee."

The idea was simple: Who makes the mess, pays for the cleanup. Since plastic producers create the waste that ends up on streets and in parks, they should pay a tax to fund the street sweepers and trash collectors.

But here is the big question: Who actually ends up paying that fee?

Does the plastic factory owner swallow the cost and keep their profit lower?
Or do they simply add the fee to the price tag, passing the cost right onto you, the shopper?

This paper is like a detective story trying to solve that mystery. The author, Felix Reichel, looked at millions of price tags over five years to see if the "cleanup fee" showed up on the shelf.

The Detective's Tools: The "Time-Travel" Camera

To figure this out, the author didn't just look at prices before and after the law changed. That would be tricky because, during those years, the world was going crazy with inflation, energy crises, and the pandemic. Prices for everything were going up, like a rising tide lifting all boats.

Instead, the author used a clever trick called an "Event Study." Think of it like a time-travel camera that takes a snapshot of prices every three months.

The Treatment Group: He looked at the "guilty" items (plastic balloons, to-go cups) that had the new fee.
The Control Group: He looked at "innocent" items (non-plastic goods) sold in the same stores that didn't have the fee.
The Comparison: He asked, "Did the plastic balloons get more expensive faster than the innocent items?"

If the plastic balloons jumped in price while the innocent items stayed steady, the author could say, "Aha! The fee was passed on to the customer!"

The Findings: What the Camera Saw

The results were a mix of clear answers and blurry pictures, depending on what you were looking at.

1. The Balloons: The "Squeaky Clean" Case 🎈

In Austria, the story for balloons was very clear.

The Analogy: Imagine a balloon seller. Before the law, the price was low. After the law, the seller added a fee.
The Result: The price of balloons jumped up significantly compared to other items. The study found that within a year, balloons became about 13% more expensive than they would have been without the fee.
The Takeaway: The cost of the cleanup fee was almost entirely passed on to you, the buyer. The balloon seller didn't eat the cost; they added it to the price tag.

2. The Coffee Cups: The "Foggy" Case ☕

The story for plastic coffee cups was much messier.

The Analogy: Imagine a coffee shop. They have to pay the fee for the plastic cup, but they are also fighting a war on prices with other shops.
The Result: The data was noisy. Sometimes the cups got cheaper, sometimes more expensive, and the changes weren't statistically clear.
The Takeaway: We can't say for sure if the fee made coffee cups more expensive. Maybe the shops absorbed the cost to keep customers happy, or maybe the chaos of the economy (inflation, energy prices) drowned out the signal.

3. Germany: The "Too Early" Case 🇩🇪

Germany started their cleanup fund in 2024. The study ended in mid-2025.

The Analogy: It's like planting a seed and trying to measure how tall the tree is two weeks later.
The Result: There wasn't enough time to see a clear pattern. The data is there, but it's too early to tell if the trees (prices) are growing.

Why Does This Matter?

You might ask, "So what if the price goes up? Isn't that bad for shoppers?"

The author explains that this is actually the first step of a successful plan.

The Goal: The government wants people to stop buying single-use plastics.
The Mechanism: If the price goes up (Pass-Through), people might think, "Hmm, that balloon is too expensive now. I'll just use a reusable one or not buy it at all."
The Missing Piece: This study only looked at prices. It didn't have data on how many balloons people actually bought.
- Analogy: The study confirmed that the "price tag" got heavier. But to know if the policy worked, we need to know if people stopped buying the balloons. If the price goes up but people keep buying them anyway (because they really love balloons), the cleanup fee won't help the environment. If the price goes up and people stop buying, the streets will be cleaner.

The Big Picture Summary

The Policy: Governments made plastic producers pay for trash cleanup.
The Result in Austria: For things like balloons, the producers passed that cost directly to you. The price went up.
The Result for Cups: It's unclear; the market is too noisy to tell yet.
The Result for Germany: It's too soon to tell.
The Lesson: The policy is working as a "price signal." The cost is reaching the consumer. Whether that signal is strong enough to change your behavior and clean up the streets is the next chapter of the story, one that needs more data to solve.

In short: The bill for the plastic mess has arrived, and in many cases, it's been handed directly to the shopper. Whether that makes us buy less plastic is the next question.

1. Problem Statement and Context

The paper addresses the economic incidence of environmental policies targeting Single-Use Plastics (SUPs). Following the EU Directive (EU) 2019/904, member states implemented measures to internalize the external costs of plastic litter (clean-up costs, environmental damage) by shifting financial responsibility to producers.

Core Question: Do upstream producer charges and fund payments imposed on SUP producers translate into higher retail consumer prices (price pass-through)?
Context: The study analyzes data from 2020 to 2025, a period characterized by significant macroeconomic shocks, including the post-pandemic recovery, the war in Ukraine, and subsequent energy/commodity price spikes. These factors complicate the identification of policy-specific price effects.
Policy Mechanisms:
- Austria (Treatment Year 2022): Introduced product-based producer charges (e.g., €225/ton for food packaging, €450/ton for tobacco filters) and a digital reporting system (ARA Online).
- Germany (Treatment Year 2024): Implemented the Einwegkunststofffondsgesetz (Single-Use Plastics Fund Act), a central fund where producers pay based on product and weight.

2. Methodology

The paper employs a high-frequency panel event-study design combined with a Difference-in-Differences (DiD) framework.

Data Source: A monthly product–retailer panel spanning January 2020 to May 2025. The dataset consists of "offer spells" (price observations) for thousands of items across a deep product taxonomy (categories, subcategories, etc.).
Treatment and Control Groups:
- Treated: Products subject to SUP regulations (e.g., balloons, plastic to-go cups).
- Control: Non-SUP products sharing the same retail channels and digital platforms. The study explicitly avoids using direct substitutes to prevent substitution bias, instead relying on products with similar retail exposure but different supply shocks.
Empirical Specification:
- Outcome Variable: A price index $P_{ijt}$ normalized to February 2022 ( $P=100$ ). The analysis is conducted in levels (index points) rather than logs to preserve short-duration price spells and avoid mechanical exclusion of single-period data.
- Regression Model:
  $Y_{ijt} = \sum_{b \in B \setminus \{0\}} \beta_b^{(g)} \mathbb{1}\{b_{int} = b\} + \alpha_i + \delta_j + \varepsilon_{ijt}$
  Where $Y_{ijt}$ is the price index, $\alpha_i$ are product fixed effects, $\delta_j$ are retailer fixed effects, and $b$ represents 3-month event-time bins relative to the policy implementation.
- Identification Strategy: The design relies on within-country comparisons between SUP and non-SUP products. Time fixed effects are deliberately excluded to preserve variation from common macro shocks (e.g., inflation) that affect both groups, relying on the DiD contrast to isolate relative movements.
- Standard Errors: Two-way clustered by product and retailer to account for serial correlation and heteroskedasticity.

3. Key Contributions

High-Frequency Evidence: Provides one of the first granular, high-frequency analyses of price pass-through for SUP regulations in Europe, moving beyond aggregate data to product-level retail prices.
Handling Macro Shocks: Demonstrates a robust identification strategy that isolates policy effects amidst the "turbulent" macroeconomic environment of 2020–2025 (pandemic, war, inflation) without over-controlling for time trends that might absorb the policy signal.
Welfare Framework: Connects the empirical price findings to a theoretical CES (Constant Elasticity of Substitution) model. The author explicitly delineates the gap between price incidence (which this paper measures) and welfare/environmental impact (which requires quantity data), offering a clear roadmap for future research.
Heterogeneous Effects: Disaggregates results by product category (balloons vs. cups) and country (Austria vs. Germany), revealing that pass-through is not uniform across all SUP types or policy timelines.

4. Key Results

A. Austria (Post-Policy Window: 2022–2025)

Pooled SUP Products: There is clear, statistically significant evidence of price pass-through.
- 12-month DiD: +13.01 index points ( $p < 0.001$ ).
- Full Period DiD: +19.42 index points ( $p < 0.001$ ).
- Interpretation: SUP products became roughly 13–19% more expensive relative to non-SUP controls within a year of the policy.
Balloons (Highly Taxed): Exhibit the strongest and most persistent effects.
- 12-month DiD: +13.43 points ( $p = 0.007$ ).
- Full Period DiD: +19.96 points ( $p < 0.001$ ).
- Pattern: Pre-policy prices were depressed; post-policy, treated balloon prices recovered toward the baseline while control prices rose more slowly, creating a widening gap.
To-Go Cups: Results are ambiguous and volatile.
- 12-month DiD: -22.73 points ( $p = 0.096$ , negative and insignificant).
- Full Period DiD: Positive but statistically insignificant.
- Interpretation: The lack of clear pass-through may be due to product design, contracting arrangements, or competition from reusable alternatives.

B. Germany (Post-Policy Window: 2024–2025)

Results: Estimates are not statistically significant.
Reasoning: The policy took effect in January 2024, and the data ends in May 2025. The post-policy window is too short to detect gradual price adjustments, especially given the concurrent macroeconomic volatility.
Conclusion: German results are treated as descriptive rather than causal. The pooled cross-country analysis is driven primarily by the Austrian data.

5. Significance and Policy Implications

Incidence: The study confirms that producer charges for SUPs are largely passed through to consumers in Austria, particularly for items like balloons. This validates the policy mechanism of using price signals to alter behavior, though it also implies a regressive cost burden on consumers.
Limitations: The study is limited to price incidence. It cannot determine if higher prices successfully reduced consumption, induced substitution to reusables, or lowered litter, as the dataset lacks quantity/sales volume data.
Theoretical Link: Using a CES model, the author argues that while the price pass-through ( $\rho > 0$ ) is confirmed, the ultimate environmental benefit depends on the elasticity of substitution ( $\sigma$ ). If consumers do not substitute away from SUPs despite price hikes, the environmental gains will be minimal.
Future Research: The paper calls for linked panels including sales volumes and municipal waste data to fully evaluate the welfare effects (Consumer Surplus + Producer Profits + Tax Revenue - Environmental Damages) and to apply more advanced staggered DiD estimators (e.g., Callaway & Sant'Anna, Sun & Abraham) as longer time series become available.

Summary Conclusion

Felix Reichel's paper provides robust evidence that Austria's 2022 SUP producer charges resulted in significant retail price increases for treated products relative to controls, with the effect being most pronounced for balloons. In contrast, the German 2024 fund implementation yields inconclusive results due to a short observation window. The study successfully isolates policy effects from major macroeconomic shocks but highlights the critical need for quantity data to assess the ultimate environmental efficacy of these regulations.