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Pricing and regulating affect environmental ethics

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  • Bruno Frey

Abstract

Effluent charges and tradeable permits are economically efficient but rarely used. A new explanation for this discrepancy is offered. Pricing may crowd out environmental ethics in the pricing, and via spillovers, also in non-pricing sectors. Pricing may therefore increase pollution, providing a reason why decision-makers tend to reject environmental pricing. Five propositions showing the conditions for counterproductive effects are advanced. They are consistent with available empirical evidence. Regulation by setting standards and subsidies damage environmental ethics less than pricing, because pollution is condoned. Damaging environmental ethics may prevent political action in favor of the environment. Copyright Kluwer Academic Publishers 1992

Suggested Citation

  • Bruno Frey, 1992. "Pricing and regulating affect environmental ethics," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 2(4), pages 399-414, July.
    • Handle: RePEc:kap:enreec:v:2:y:1992:i:4:p:399-414
    DOI: 10.1007/BF00304969
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