Internalization of Externalities as a Means to Support Decisions Intelligently

Alfred Endres ()
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Alfred Endres: FernUniversität in Hagen

A chapter in Intelligent Decision Support, 2008, pp 481-495 from Springer

Abstract: Abstract In general equilibrium theory, it has been shown that market equilibria are socially optimal under certain conditions. However, if the society under consideration does not meet these conditions, market failure prevails. One of the causes for market failure, most prominent in the literature, is externality. Real world examples for the theoretical concept of externality are environmental problems. In this paper it is shown how policy makers can intelligently support individual decisions in order to harmonize individual utility maximization and social welfare maximization, even if externalities exist. Alternative means to internalize externalities are assessed.

Keywords: Externalities; Internalization; Environmental Policy; Liability Law (search for similar items in EconPapers)
Date: 2008
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Persistent link: https://EconPapers.repec.org/RePEc:spr:sprchp:978-3-8349-9777-7_28

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DOI: 10.1007/978-3-8349-9777-7_28

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