Internalizing Externalities and Sustainable Development
Internalization of externalities refers to all measures (public or private) which guarantee that unpaid benefits or costs are taken into account in the composition of prices of goods and services (Ding et al. 2014). There are different measures for internalizing externalities: corrective taxes, emission standards, tradable permits, property rights to use resources, government subsidies, etc. Internalizing positive and negative externalities helps to achieve allocative efficiency, but not necessarily sustainability which aims also at more justice in the domain of human–nature relationships.
Internalization of externalities and sustainable development are closely related since sustainable development may be ensured by internalizing the complete costs of externalities and long-term stability of the environment. One essential step towards achieving...
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