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Market simulation and the provision of public goods: A non-paternalistic response to anomalies in environmental evaluation

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  • Sugden, Robert

Abstract

Most normative economics assumes that individuals have coherent preferences. This paper responds to growing evidence of failures of this assumption, particularly in the context of stated-preference methods widely used in environmental policy analysis. It proposes a non-paternalistic concept of consumer sovereignty that does not assume preference coherence, is satisfied by competitive markets, and can be applied to the provision of public goods. A key implication is that decisions should reflect valuations revealed 'at the point of consumption'. Such valuations, which can be inferred from hedonic prices, may be less susceptible to willingness-to-accept (WTA)/willingness-to-pay (WTP) disparities than those elicited by stated-preference methods.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Environmental Economics and Management.

Volume (Year): 57 (2009)
Issue (Month): 1 (January)
Pages: 87-103

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Handle: RePEc:eee:jeeman:v:57:y:2009:i:1:p:87-103

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Web page: http://www.elsevier.com/locate/inca/622870

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Keywords: Market simulation Public goods Paternalism Environmental evaluation;

References

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  1. Horowitz, John K. & McConnell, K. E., 2003. "Willingness to accept, willingness to pay and the income effect," Journal of Economic Behavior & Organization, Elsevier, vol. 51(4), pages 537-545, August.
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  5. Robert Sugden, 2007. "The value of opportunities over time when preferences are unstable," Social Choice and Welfare, Springer, vol. 29(4), pages 665-682, December.
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  7. Robert Sugden, 2004. "The Opportunity Criterion: Consumer Sovereignty Without the Assumption of Coherent Preferences," American Economic Review, American Economic Association, vol. 94(4), pages 1014-1033, September.
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  13. Loomes, Graham & Chris Starmer & Robert Sugden, 2002. "Do Anomalies Disappear in Repeated Markets?," Royal Economic Society Annual Conference 2002 132, Royal Economic Society.
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  17. Munro, Alistair & Sugden, Robert, 2003. "On the theory of reference-dependent preferences," Journal of Economic Behavior & Organization, Elsevier, vol. 50(4), pages 407-428, April.
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Citations

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Cited by:
  1. Norwood, F. Bailey & Lusk, Jayson L., 2011. "A calibrated auction-conjoint valuation method: Valuing pork and eggs produced under differing animal welfare conditions," Journal of Environmental Economics and Management, Elsevier, vol. 62(1), pages 80-94, July.
  2. Aronsson, Thomas & Johansson-Stenman, Olof, 2011. "Animal Welfare and Social Decisions," Working Papers in Economics 485, University of Gothenburg, Department of Economics.
  3. Lindsey, Robin, 2011. "State-dependent congestion pricing with reference-dependent preferences," Transportation Research Part B: Methodological, Elsevier, vol. 45(10), pages 1501-1526.
  4. Elisabeth Gsottbauer & Jeroen Bergh, 2011. "Environmental Policy Theory Given Bounded Rationality and Other-regarding Preferences," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 49(2), pages 263-304, June.
  5. Hammitt, James & Robinson, Lisa, 2010. "Behavioral Economics and the Conduct of Benefit-Cost Analysis: Towards Principles and Standards," TSE Working Papers 10-269, Toulouse School of Economics (TSE).
  6. Marette St├ęphan & Roosen Jutta & Blanchemanche Sandrine, 2011. "The Combination of Lab and Field Experiments for Benefit-Cost Analysis," Journal of Benefit-Cost Analysis, De Gruyter, vol. 2(3), pages 1-36, August.
  7. Christian Schubert, 2012. "Opportunity and Preference Learning," Papers on Economics and Evolution 2012-08, Philipps University Marburg, Department of Geography.
  8. Christian Schubert & Andreas Chai, 2012. "Sustainable Consumption and Consumer Sovereignty," Papers on Economics and Evolution 2012-14, Philipps University Marburg, Department of Geography.
  9. Ben McQuillin & Robert Sugden, 2012. "Reconciling normative and behavioural economics: the problems to be solved," Social Choice and Welfare, Springer, vol. 38(4), pages 553-567, April.

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