Landfill exhaustion is important problem on the industry waste management for the local governments but it still remains unsettled. We have so far confronted an exhaustion problem of landfill due to a rapid industrialization. According to the Hotelling rule, it is inevitable that such an exhaustion of landfill will cause its service price to increase. We adapt Hotelling rule to the landfill-tipping fee.
In this paper, we consider the case of Tokyo and other prefecture by using the Tokyo's interregional Input-Output table analysis. It is clear that the waste disposal as well as the landfill-use in Tokyo mainly relies on other prefectures. We also study an optimal landfill policy as well as a suitable local environmental policy, and then analyze the effect of industrial and economic impact on the long run situation. Moreover, we compare the flexible tax system following the Hotelling rule to a traditional taxation policy and confirm its incentive effective on reducing wastes in Tokyo.