Coalitions of free-marketeersp, oliticians, and environmentalistsi ncreasingly are turning to the use of market-basedin centives in formulatinge nvironmental policy. Onep romising application of market-basedin centives is in the management of residential municipal solid waste. This article focuses on unit-based pricing programs established in conjunction with community recycling programs. Using data gathered through telephone and mail surveys of 21 cities, we demonstrate the strong potential for unit pricing to improve the efficiency of residential solid waste management. Coalitions of free-marketeers, politicians, and environmentalists increasingly are advocating the use of market-based incentives rather than commandand- control regulation in the formulation of U.S. environmental policy. This alternative approach is perhaps best exemplified by the publication of Project 88 and its 1992 update [Stavins et al., 1988, 1992]. Both of these nonpartisan reports provide innovative recommendations that would harness market forces to achieve higher levels of environmental protection at lower costs to society. The superior economic efficiency result associated with market-based incentives, however, is dependent on, among other things, the number and type of players in the market, the relative competitiveness of the market, the need for monitoring and enforcement, information requirements, and transaction costs. Unit pricing of residential municipal solid waste (MSW) represents one promising application of market-based incentives to environmental policy and management.