Abstract
Environmental policy is designed within the confluence of markets, missing markets, and no markets. Within this mixture, economists offer working rules to help make outcomes more efficient, usually based on ideas formed by rational choice theory. The rules ask decision-makers to compare benefits in relation to costs, to account for the risks and gains across time and space for winners and losers, to facilitate the movement of resources from low-value uses to high-value uses, and to equate incremental gains per cost across policy actions. The environmental economic challenge is to find effective decision rules that will help move an economy towards efficient resource allocation in the face of market failure, for example, externalities, non-rival consumption, non-excludable net benefits, nonconvexities and asymmetric information (see Hanley, Shogren and White, 2007).
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Shogren, J.F. (2010). experimental methods in environmental economics. In: Durlauf, S.N., Blume, L.E. (eds) Behavioural and Experimental Economics. The New Palgrave Economics Collection. Palgrave Macmillan, London. https://doi.org/10.1057/9780230280786_17
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DOI: https://doi.org/10.1057/9780230280786_17
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