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The article discusses possible reasons for the failure of Russia’s waste management industry reform and highlights the ownership blurring as a factor that may hinder the transition to a circular economy, which has been proposed as one of the outcomes of the reform. This study aims to address possible obstacles to transitioning to a circular economy in the Kaliningrad region. Methodologically, the study uses instruments of new institutional economics: by comparing discrete institutional alternatives for municipal solid waste (MSW) management, the authors propose incentive schemes that will likely stimulate the transition to a circular economy in the region. It is shown that, in Russia, the identification of the holder of the property right to waste is complicated. This can be a hindrance to effective MSW management. Moreover, objects handled by MSW management services may fall into different types, but at the same time, it is possible to transfer objects from one type to another. One of the ways to improve the exclusion of services of MSW utilization is the introduction of incentive tariffs. Low-rise housing in the Kaliningrad region makes it an ideal region for the introduction of such a scheme. When calculating the unsorted waste transport fee, a multiplier can be used to reduce the payment for waste-separating households. This can serve as an additional incentive for overcoming collective action problem in MSW collecting and sorting. To prevent social resistance to such a policy, incentive schemes should be implemented on a voluntary basis.