This paper uses an economic model to explain the so-called ”crowding out” effect, which happens in the waste-tire recycling business. Due to some reasons, the recycling of waste motorcycle tires differs greatly from the recycling of motor tires. Most of the waste-tire recycling belongs to the latter. A revised model is employed to illustrate our current subsidy mechanism for the waste motorcycle-tire recycling can hardly lessen the ”crowding out” effect. Borrowing from other countries' experiences, our results show that the problem may be solved and the welfare can be increased if the subsidy mechanism for the waste motorcycle-tire recycling spot is adjusted.