This article examines the consequences of implementing extended producer responsibility (EPR). The analysis identifies to what extent EPR creates economic incentives, and what the financial consequences are. The case of car scrapping in Sweden is used as an example. EPR gives rise to two responsibilities; the consumer has the responsibility to return the product, the end-of-life vehicle, and the producer has the responsibility to handle the end-of-life management. EPR implicitly assumes that consumers will fulfil their responsibility without any economic incentive. This has no empirical support in the literature. The consumers will bear the costs associated with dismantling although the producer is responsible for the payment. This responsibility gives rise to a major future financial liability. (C) 2004 Elsevier Ltd. All rights reserved.