The Internalization of External Effects

Hans Wiesmeth ()
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Hans Wiesmeth: TU Dresden

Chapter Chapter 6 in Environmental Economics, 2012, pp 77-101 from Springer

Abstract: Abstract Environmental or external effects are not sufficiently integrated into the market system, leading therefore to “market failure” in the sense of an inefficient market equilibrium. The “internalization” of external effects intends to restore efficiency and reestablish optimality of the equilibrium allocation. As external effects signal missing markets, the main idea to be investigated in this chapter is the assigning of “property rights” for the environmental commodities in question or the immediate establishing of “artificial” markets, thereby “completing” the market system. The various tools to achieve this task are formally related.

Keywords: External Effect; Equilibrium Price; Tradable Emission; Marginal Damage; Equilibrium Allocation (search for similar items in EconPapers)
Date: 2012
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Persistent link: https://EconPapers.repec.org/RePEc:spr:sptchp:978-3-642-24514-5_6

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DOI: 10.1007/978-3-642-24514-5_6

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