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The Internalisation of External Costs in Transport: From the Polluter Pays to the Cheapest Cost Avoider Principle

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  • Dieter Schmidtchen

    (Center for the Study of Law and Economics)

  • Christian Koboldt

    (Center for the Study of Law and Economics)

  • Jenny Monheim

    (Center for the Study of Law and Economics)

  • Birgit Will

    (Center for the Study of Law and Economics)

  • Georg Haas

    (Center for the Study of Law and Economics)

Abstract

The European Commission mandated the consulting firm CE Delft to develop a framework for the internalisation of external costs and to devise a number of potential internalisation scenarios for further analysis. The results of their preliminary research are published in a CE discussion paper, and the Commission is now formulating draft legislative proposals which will be subjected to a consultation of stakeholders.The present report offers a critical assessment of the above mentioned CE study, provides a theoretical examination of the relative strengths and weaknesses of the polluter pays principle and the cheapest cost avoider principle in relation to the problems arising in the road transport sector, demonstrates how the cheapest cost avoider principle can be applied in practice by providing examples of external costs in road transport, and puts forward recommendations for the appropriate principles that should guide the Commission's further activities in this area.

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Bibliographic Info

Paper provided by Berkeley Electronic Press in its series German Working Papers in Law and Economics with number 2008-1-1214.

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Handle: RePEc:bep:dewple:2008-1-1214

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Web page: http://www.bepress.com/gwp/default/

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Keywords: Cheapest Cost Avoider; Externalities; Transport;

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  1. Hans-Werner Sinn, 2007. "The Welfare State and the Forces of Globalization," NBER Working Papers 12946, National Bureau of Economic Research, Inc.
  2. Heiner, Ronald A, 1983. "The Origin of Predictable Behavior," American Economic Review, American Economic Association, vol. 73(4), pages 560-95, September.
  3. William D. Nordhaus, 2007. "A Review of the Stern Review on the Economics of Climate Change," Journal of Economic Literature, American Economic Association, vol. 45(3), pages 686-702, September.
  4. Wittman,Donald, 2006. "Economic Foundations of Law and Organization," Cambridge Books, Cambridge University Press, number 9780521685245.
  5. Rose-Ackerman, Susan, 1989. "Dikes, Dams, and Vicious Hogs: Entitlement and Efficiency in Tort Law," The Journal of Legal Studies, University of Chicago Press, vol. 18(1), pages 25-50, January.
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  7. Stavins, Robert & Jaffe, Judson & Schatski, Todd, 2007. "Too Good to Be True? An Examination of Three Economic Assessments of California Climate Change Policy," Working Paper Series rwp07-016, Harvard University, John F. Kennedy School of Government.
  8. Enrico, Baffi, 2007. "The Problem of Internalisation of Social Costs and the Ideas of Ronald Coase," MPRA Paper 7277, University Library of Munich, Germany.
  9. Louis Kaplow, 2005. "Why measure inequality?," Journal of Economic Inequality, Springer, vol. 3(1), pages 65-79, April.
  10. Martin L. Weitzman, 2007. "A Review of the Stern Review on the Economics of Climate Change," Journal of Economic Literature, American Economic Association, vol. 45(3), pages 703-724, September.
  11. Schelling Thomas C., 2007. "Climate Change: The Uncertainties, the Certainties and What They Imply About Action," The Economists' Voice, De Gruyter, vol. 4(3), pages 1-5, July.
  12. Baumol, William J, 1972. "On Taxation and the Control of Externalities," American Economic Review, American Economic Association, vol. 62(3), pages 307-22, June.
  13. Nuno Garoupa, 2009. "Least-Cost Avoidance: The Tragedy of Common Safety," Journal of Law, Economics and Organization, Oxford University Press, vol. 25(1), pages 235-261, May.
  14. Burrows, Paul, 1999. "Combining regulation and legal liability for the control of external costs," International Review of Law and Economics, Elsevier, vol. 19(2), pages 227-244, June.
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