 Creating sustainability based on mainstream economic thinkingArild Vatn Chapter 14 in Rethinking Ecological Economics, 2026, pp 231-247 from Edward Elgar Publishing Abstract: This chapter presents neoclassical economic thinking regarding policies to correct for the environmental impacts of economic activity – termed externalities – and discusses the potential of this understanding to create a sustainable future. First, the theory of economic instruments like taxes, tradable quotas and subsidies is briefly presented. Thereafter, the realism of these policies is discussed. Here the relevance of thinking in terms of optimality is scrutinized. Also, the implications of largely avoiding distributional and transaction cost issues are discussed. The same regards the limitations of basing policy advice on economic man assumptions. Most problematic is, however, a lacking understanding of the present political dynamics around environmental policies which may be characterized as ‘a grow first – correct later’ type of strategy. Thinking about environmental harm as accidental externalities precludes a systems’ oriented understanding. The capacity of the mainstream to help us create a sustainable economy is grossly inhibited by this. Keywords: Economic policy instruments; Externalities; Distributional effects; Transaction costs; Motivational issues; Sustainability (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:elg:eechap:21493_14 Ordering information: This item can be ordered from Access Statistics for this chapter More chapters in Chapters from Edward Elgar Publishing |
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