Abstract
Building on the seminal contributions by Pigou (1920), Coase (1960) and Baumol and Oates (1971), economists have extensively explored the role that economic incentives might play in bringing a more efficient allocation of natural resources. The theory of environmental economics suggests that pricing instruments are an adequate means to internalize external costs. More specifically, there is wide-spread agreement within the scientific community that from a theoretical point of view pricing instruments are preferable to alternative measures due to their efficiency advantages (Frey et al., 1985). However, though economists see pricing instruments as an attractive policy tool, most attempts to introduce economic incentives in environmental policy have failed and the acceptance of these mechanisms in the political debate is still rather limited (Hahn, 1989; Frey and Schneider, 1997).
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Weck-Hannemann, H. (2004). Environmental Politics. In: Rowley, C.K., Schneider, F. (eds) The Encyclopedia of Public Choice. Springer, Boston, MA. https://doi.org/10.1007/978-0-306-47828-4_7
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DOI: https://doi.org/10.1007/978-0-306-47828-4_7
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