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The Old Lady Visits Your Backyard: A Tale of Morals and Markets

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  • Frey, Bruno S
  • Oberholzer-Gee, Felix
  • Eichenberger, Reiner

Abstract

Local opposition to many projects makes it increasingly difficult to find sites for socially desirable facilities. As has been widely documented, compensation for local disamenities does not increase the level of support. An empirical analysis of the Swiss search for a nuclear waste repository even reveals decreased acceptance due to the rejection of bribes and the crowding-out of public spirit. However, a 'compensation cycle' may be exploited to finally win the support of host communities. As siting issues are decided in the realm of politics, an economic theory of compensation must focus on the interplay between morals and markets. Copyright 1996 by University of Chicago Press.

Suggested Citation

  • Frey, Bruno S & Oberholzer-Gee, Felix & Eichenberger, Reiner, 1996. "The Old Lady Visits Your Backyard: A Tale of Morals and Markets," Journal of Political Economy, University of Chicago Press, vol. 104(6), pages 1297-1313, December.
  • Handle: RePEc:ucp:jpolec:v:104:y:1996:i:6:p:1297-1313
    DOI: 10.1086/262060
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    References listed on IDEAS

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    1. Franciosi, Robert, et al, 1995. "Fairness: Effect on Temporary and Equilibrium Prices in Posted-Offer Markets," Economic Journal, Royal Economic Society, vol. 105(431), pages 938-950, July.
    2. Kahneman, Daniel & Knetsch, Jack L & Thaler, Richard, 1986. "Fairness as a Constraint on Profit Seeking: Entitlements in the Market," American Economic Review, American Economic Association, vol. 76(4), pages 728-741, September.
    3. Howard Kunreuther & Kevin Fitzgerald & Thomas D. Aarts, 1993. "Siting Noxious Facilities: A Test of the Facility Siting Credo," Risk Analysis, John Wiley & Sons, vol. 13(3), pages 301-318, June.
    4. anonymous, 1991. "Monetary policy and open market operations during 1990," Quarterly Review, Federal Reserve Bank of New York, vol. 16(Spr), pages 52-78.
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