Externalities — A market model failure
We focus here on a set of conceptual problems related to the accepted theory of externalities. We are primarily concerned with difficulties that arise when a theoretical system is extended beyond its logical domain. This is the practice in externality theory when the market model assuming independent agents is used to analyze physical interdependency. The different kinds of dependencies obscure the standard use of the Paretian analysis, as the issues of rights and efficiency are mixed up. The creation of emissions and the creation of externalities are further not held apart producing flows in the efficiency evaluations. Due to the interdependencies involved, actions of both emitter and victim must be taken into account while searching for efficient policies. Finally, we analyze the interrelationships between what is termed the internal structure of the market model and the annexed sphere of externalities. We conclude that the accepted policy prescriptions both assume and demand no interrelationships between these two spheres. We find the assumption unrealistic and inconsistent as concerns the basic foundations of the market model. There are two main traditions addressing externalities — the Coasean and the Pigovian. This paper shows that both are vulnerable to the above critique. Thus the presumption that externality theory is now settled and coherent is seen to be without theoretical support. Copyright Kluwer Academic Publishers 1997
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Volume (Year): 9 (1997)
Issue (Month): 2 (March)
|Contact details of provider:|| Web page: http://www.springer.com|
Postal:c/o EAERE Secretariat - Fondazione Eni Enrico Mattei - Isola di San Giorgio Maggiore 8, I-30124 Venice, Italy
Web page: http://www.eaere.org/
More information through EDIRC
|Order Information:||Web: http://www.springer.com/economics/environmental/journal/10640/PS2|
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Vatn Arild & Bromley Daniel W., 1994. "Choices without Prices without Apologies," Journal of Environmental Economics and Management, Elsevier, vol. 26(2), pages 129-148, March.
- Baumol,William J. & Oates,Wallace E., 1988.
"The Theory of Environmental Policy,"
Cambridge University Press, number 9780521311120, May.
- Ronald C. Griffin, 1995. "On the Meaning of Economic Efficiency in Policy Analysis," Land Economics, University of Wisconsin Press, vol. 71(1), pages 1-15.
- Baumol, William J, 1972. "On Taxation and the Control of Externalities," American Economic Review, American Economic Association, vol. 62(3), pages 307-322, June.
- Perrings,Charles, 1987. "Economy and Environment," Cambridge Books, Cambridge University Press, number 9780521340816, May.
When requesting a correction, please mention this item's handle: RePEc:kap:enreec:v:9:y:1997:i:2:p:135-151. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Sonal Shukla)or (Rebekah McClure)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.