Environmental Responsibility: Impact of Waste-Sorting Regulation on Secondary Market

Proper waste disposal in an environmentally friendly manner is crucial for protecting both ecosystems and public health. Among various policy tools, waste-sorting regulations and the growth of secondary markets—where consumers resell used goods—offer promising solutions for more sustainable waste management. However, how such regulations affect secondary markets remains unclear, as user motivations and convenience differ from those in the primary market. In this paper, we address this question through a natural experiment: the 2019 implementation of mandatory waste-sorting regulations in Shanghai. Using data on over 362 million resale listings from a leading online platform, we examine the policy’s impact on both resale listings and purchase volume. We employ the synthetic control method to construct a comparable control group and use difference-in-differences to estimate the policy’s impact. We find no significant change in overall resale listings. However, among environmentally responsible younger users, resale listings decrease by 8.43% and purchase volume declines by 1.95%. The effect is particularly pronounced for easily discarded goods and inactive users. Our findings reveal a trade-off: although regulations encourage responsible disposal, they may also unintentionally discourage reuse.