Different from plastics recycling policies in many European countries, the German Dual System aims to provide a comprehensive regulatory system for post-consumer plastics recycling. Our paper analyses, how the interplay of actors and regulations shaped market processes in that system. Based on 18 expert interviews, we discuss, how institutional factors influenced the system outcome at the level of recycling markets. The Dual System led to the development of three recycling market segments that differ substantially with respect to competition, market behaviour, and market outcomes. While a functioning market for medium quality recycling products was established, also a cost-intensive segment for low-quality products developed. Existing incentives do not provide an appropriate framework for a high-quality market segment to develop. Our analysis shows that the Dual System was partly successful in developing markets for plastics recycling. A continuous adaption of the regulatory environment is required to counteract unwanted developments.