Voluntary environmental agreements are often suspected to promote collusive practices between participating firms. The paper addresses the antitrust implications of Germany’s voluntary Dual Management System for Packaging Waste Collection and Recycling (DSD). It uses analytical tools of the economic theory of the firm to examine features of DSD’s governance structure that were often identified to impede competition. While the paper does not argue that DSD performs as efficiently as a hypothetical solution in a more competitive setting, it shows that these features have an economic rationale from the viewpoint of the theory of the firm. The general conclusion is that it is necessary to carefully analyze the institutional fine-tuning of a voluntary agreement in order to derive the overall impact stemming from a formal lack of competition. A more case-to case- oriented, institutional research approach could therefore fruitfully supplement model-driven, theoretical analyses of voluntary environmental agreements and their effect on market competition.

Reprinted with Permission from Springer's Open Choice