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Public Policies, Markets, and Externalities

  • François Bonnieux
  • Hervé Guyomard
Part of the Springer Series on Environmental Management book series (SSEM)

Abstract

The absence of externalities is one of the conditions required for competitive markets to achieve efficient resource allocations. Externalities occur in situations where the activities of one economic agent affect or spill over into the technology, consumption set, or preferences of another agent. Externalities, which may be positive (in that case, they have beneficial external effects) or negative (in that case, they have adverse external effects), are one example of market failures. They mainly arise from the fact that environmental goods and services often have no market. The environment is considered as a free resource, which is zero priced and therefore overused. When interaction between private agents does not result in an efficient resource allocation, government intervention is required in order to internalize external effects. Nevertheless, even in the absence of market failure, government intervention may also be justified mainly for equity or national industry protection reasons. This chapter addresses only the problem of externalities and environmental policy strategies, emphasizing those relevant for agriculture activities and resources.

Keywords

European Union Agricultural Policy Negative Externality Marginal Abatement Cost Extensive Margin 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.

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Copyright information

© Springer Science+Business Media New York 1999

Authors and Affiliations

  • François Bonnieux
  • Hervé Guyomard

There are no affiliations available

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