Efficiency or technology adoption: A case study in waste-treatment technology

•There is a technology that played a positive and important role and increased productivity.•New technologies, excluding incineration with prior processing, lower productivity.•To prevent government failures, technology to be supported should not be specified.•Instead, policies to encourage flexible decision making should be examined. Improvements in the effectiveness and efficiency of supply-side waste management are necessary in many countries. In Japan, municipalities with limited budgets have delayed the introduction of new waste-management technologies. Thus, the central government has used subsidies to encourage municipalities to adopt certain new technologies to improve waste-management efficiency. In this study, we measure the efficiency of waste management and explore how technology is related to technical efficiency. We find that municipalities are likely to adopt less-efficient technologies and that the central government's policies are likely to promote inefficient technology adoption by local governments.