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• We assess the economic consequences of the China's import ban on waste plastics. • The ban decreased the economic surplus of Japan by up to 95 billion yen. • Japan's plastic waste recycling will increase the economic surplus. • Reducing the generation of plastic waste might shrink the plastic recycling market. Over the years, China has imported a significant quantity of plastic waste from the rest of the world. In December 2017, however, it implemented a ban on the import of plastic waste, used paper, and miscellaneous scrap goods. This study aims to provide new insight on the waste trade, with specific focus on the market for recyclable plastics. By employing an economic surplus analysis, we investigate the impact of China's import ban on the market for recyclable plastics in China and Japan. Obtained results suggest a significant change in economic surpluses; Japan and China's surpluses reduced by 58 billion yen and 1,304 billion yen at the maximum, respectively. [ABSTRACT FROM AUTHOR]

• Knowledge spillovers have a positive impact on environmental innovation. • We investigated the waste recycling innovation in the USA, Japan and Europe. • Policymakers should carefully favor industrial relatedness. Since natural resources are finite, new policy instruments to sustain the most efficient processes of waste recycling are required in all countries. To this end, it is critical to explore all technology mechanisms underlying solid waste researchers and practitioners' behaviors. The study focuses on to demonstrate the importance of knowledge diffusion between the source and destination of environmental innovations. This way, policymakers can elaborate opportune strategies to improve the efficiency of innovation activities. By analyzing a sample of 240 large international firms from the USA, Japan, and Europe, this paper discusses the extent to which innovation inputs, research and development, and relative technological spillovers affect environmental innovation—that is measured by the number of waste recycle and land fertilizers patents. The novelty of the study comes from introducing a knowledge production function approach to analyze the role of technological knowledge spillovers on waste recycling and land fertilizers efficiency at the firm level. The technological relatedness between the firms is computed through technological proximity, based on the construction of technological vectors for each firm. The results reveal a significant positive impact of external spillovers on firms' environmental innovation levels. This finding is important particularly in terms of policy implications concerning industrial strategies; as in order to improve environmental innovation, incentives that favor industrial relatedness and establishing integration between firms are crucial. [ABSTRACT FROM AUTHOR]