Assuming a duopoly market where the producers use packaging recyclability to vertically differentiated their product, we analyse the efficiency of an extended producer responsibility (EPR) to deliver optimal choices of packaging. In this paper, the EPR means that the producers bear the social disposal cost of packaging waste resulting from households’ consumption of their product. Disposal of household packaging waste comprises sorting and treatment operations. Therefore, the social disposal cost is the sum of both the sorting and the dumping costs. We confirm that an EPR is not an optimal policy, and then we show that an optimal policy couples an EPR to two bonus/penalty systems: the first one reduces the sorting cost borne by the producers, the second one affects the dumping cost borne by the producers. This optimal policy entails that the producers bear a disposal cost higher (respectively lower) than the social disposal cost when improving packaging recyclability is cost-reducing (respectively costly).