Does the financing of extended producer responsibility influence economic growth?

The question of how the financing of Extended Producer Responsibility (EPR) affects the overall performance of the economy is important as products covered by EPR comprise an increasing part of the economy. In this paper, an Overlapping Generations (OLG) model with endogenous growth is applied to the case and a comparison between two financing schemes, an insurance solution and a pay-as-you-go (PAYG) solution, is made with respect to the effect on the level of production, the growth rate, the impact of a productivity shock and the risk exposure. It is found that in the case of a funded solution, both the level of production and the growth rate in production is higher than in the PAYG case, and the short-run effect of productivity shock is bigger. The policy indication is clear: EPR should be attached to a financing scheme if welfare is to be maximised.