Abstract
The Theory of Environmental Economics strongly suggests that the use of incentive instruments, which exploit the relative price effect, constitutes the most efficient and desirable policy. A recent survey on environmental policy (Hahn 1989, p. 95) notes that “the two tools which have received widespread support from the economics community (are) marketable permits and emission charges.” Environmental incentive instruments count among the most successful applications of economic theory (Faulhaber and Baumol, 1988; Cropper and Oates 1992). During the last few years, emission charges and even tradeable effluent licenses have moved from being an academic proposal to being part of the policy programme of many parties across the whole political spectrum. Nevertheless, incentive instruments are little used all over the world (Hahn, 1989); and an OECD study (1989) also sees little prospect that they will be used on an extensive scale in the future.
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Weck-Hannemann, H., Frey, B.S. (1995). Are Incentive Instruments as Good as Economists Believe? Some New Considerations. In: Bovenberg, L., Cnossen, S. (eds) Public Economics and the Environment in an Imperfect World. Natural Resource Management and Policy, vol 8. Springer, Dordrecht. https://doi.org/10.1007/978-94-011-0661-0_8
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