I can't say that I have done any great amount of research on the matter, but I can say that paper must be more cost effective than plastic given that a recycler will pay you for paper (at least a significant amount of it) and will not pay for plastic.
A recycler will pay for plain, standard paper? I didn't think anyone would without some sort of subsidy.
That being said, I think the point is that govt. wastes money and resources sending a truck to every house for their recyclables and that if it were at all feasible to get/save more energy out of the process than you put in, a private company would be doing it for a profit.