Getting the Prices Wrong: The Limits of Market-Based Environmental Policy
Market based policies are fast becoming the recommended policy panacea for all the world’s environmental problems. Implicit in such recommendations is the theory that free markets, adjusted for externalities, can always create an “efficient” allocation of society’s resources. As a result, many contemporary policymakers advocate rolling back regulations in order to let the market protect the environment. There is a fundamental distinction between the use of the market as a tool to help achieve society’s goals, and as a blueprint for society’s goals; the market is a reasonable policy tool but not a reasonable blueprint. The market as blueprint fails because there are significant public purposes that cannot be achieved by prices and markets alone. Five major arguments show that getting the prices right is often a narrow or meaningless objective; society may intentionally and appropriately choose to “get the prices wrong” in order to pursue more important goals.
|Date of creation:||13 Jun 2001|
|Note:||Type of Document - PDF; pages: 18; figures: n/a. Other working papers available at www.gdae.org|
|Contact details of provider:|| Web page: http://econwpa.repec.org|
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.:
- Gustafsson, Bo, 1998. "Scope and limits of the market mechanism in environmental management," Ecological Economics, Elsevier, vol. 24(2-3), pages 259-274, February.
- Frank Ackerman, 2001. "Still dead after all these years: interpreting the failure of general equilibrium theory," Journal of Economic Methodology, Taylor & Francis Journals, vol. 9(2), pages 119-139.
- Bromley, Daniel W., 1998. "Searching for sustainability: The poverty of spontaneous order," Ecological Economics, Elsevier, vol. 24(2-3), pages 231-240, February.
- Hartwick, John M, 1977.
"Intergenerational Equity and the Investing of Rents from Exhaustible Resources,"
American Economic Review,
American Economic Association, vol. 67(5), pages 972-974, December.
- John Hartwick, 1976. "Intergenerational Equity and the Investing of Rents from Exhaustible Resources," Working Papers 220, Queen's University, Department of Economics.
- Ackerman, Frank & Moomaw, William, 1997. "SO2 emissions trading: does it work?," The Electricity Journal, Elsevier, vol. 10(7), pages 61-66.
- 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.
- Peter A. Diamond & Jerry A. Hausman, 1994. "Contingent Valuation: Is Some Number Better than No Number?," Journal of Economic Perspectives, American Economic Association, vol. 8(4), pages 45-64, Fall.
- Solow, Robert M, 1986. " On the Intergenerational Allocation of Natural Resources," Scandinavian Journal of Economics, Wiley Blackwell, vol. 88(1), pages 141-149.
- Revesz, Richard L. & Stavins, Robert N., 2007. "Environmental Law," Handbook of Law and Economics, Elsevier.
- Richard Howarth & Richard Norgaard, 1993. "Intergenerational transfers and the social discount rate," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 3(4), pages 337-358, August. Full references (including those not matched with items on IDEAS)
When requesting a correction, please mention this item's handle: RePEc:wpa:wuwpdc:0106005. 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: (EconWPA)
If references are entirely missing, you can add them using this form.