2011年9月9日星期五

Why are environmental problems considered to be an example of market failure?

this is an essay question and i have problems with what the question is asking...|||Reverse the question, and give examples of how implemented wrong solutions have worsened the problems and deepened the expense, to set meaningful progress back.|||Because environmental problems such as air pollution have a cost, but that cost is not paid by the entity creating the pollution. Air pollution can cause buildings to corrode, more important it can cause health problems. But the cost is born by the building owners or the people with the health problems (or their insurance..but I digress).





The market doesn't play a part in this problem, in fact the bigger polluter may well have an cost advantage over a company that pollutes less because they think it is the right thing to do. Polluters can pass the cost of the problem they created onto others without paying anything. And the people who in cure costs because of the problems have few ways of avoiding the injury and its cost. Therefore markets don't work to curtail many environmental problems and the lack of this market control often makes polluting a profitable activity, which is adverse to the social good.

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