With the continually declining percentage of soft drink sales in refillable bottles in favour of cans and PET bottles, despite a growing soft drink market, governments have become increasingly concerned with the alleged more environmentally harmful impacts of throw-away convenience packaging and tried to enact policies to induce consumers to switch to refillable glass bottles. In many cases, fully or partially refundable deposits have been opted for to provide consumers with the incentive to properly dispose of packaging, but not to switch between different container types, and thus, they may not constitute the most desirable solution. The effects of various regulatory measures on producers’ choices of packaging quality and mix in the presence of consumers with differing demand intensities are analyzed to discern the least distortionary alternative.
