IMPROVING ENVIRONMENTAL POLICY: ARE MARKETS THE SOLUTION?

Research output: Contribution to journalArticle

4 Citations (Scopus)

Abstract

While market approaches are clearly valuable for improving U.S. environmental policy, they cannot solve all of the problems, and not necessarily the most difficult ones. They can ensure that a given total abatement is achieved at minimum cost. But, if pollution damages depend on how abatement effort is allocated among polluters, this is not necessarily the most desirable outcome. One also needs to be sure that the potential gains from trade implicit in market solutions will actually be realized within some given time; the empirical evidence here is not necessarily promising. Rather than how aggregate abatement should be distributed among polluters, the chief difficulty often lies in determining how much overall abatement is required. A key factor that economists tend to overlook is the difficulty of ascertaining just how benefits vary with abatement effort. Uncertainty and risk aversion in connection with the marginal benefit curve may explain regulatory actions that are otherwise hard to justify.

Original languageEnglish (US)
Pages (from-to)74-79
Number of pages6
JournalContemporary Economic Policy
Volume13
Issue number1
DOIs
StatePublished - 1995
Externally publishedYes

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environmental policy
market
economist
damages
uncertainty
costs
evidence
Environmental policy
Abatement
time

ASJC Scopus subject areas

  • Business, Management and Accounting(all)
  • Economics and Econometrics
  • Public Administration

Cite this

IMPROVING ENVIRONMENTAL POLICY : ARE MARKETS THE SOLUTION? / Hanemann, William.

In: Contemporary Economic Policy, Vol. 13, No. 1, 1995, p. 74-79.

Research output: Contribution to journalArticle

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