I spent ten minutes writing the answer, so here it is:
You mean negative reinforcement for negative externalities? I think in theory it's effective so long as:
1) It's reasonable (cutting CO2 emissions to zero is not, for instance)
2) It's well-communicated (so polluters know what's expected)
3) It has well-established causal mechanisms (punishing an auto maker for a lack of biodiversity in Canada is counter-effective; there's nothing they can do directly)
4) There is no way around it (ie, you don't create an incentive to simply "hide" the pollution by building a bigger smokestack to send the chemicals farther away or cart the toxic waste to another location)
5) It works best with a positive reinforcement, ie tax breaks or a pollution credit system where those most efficient companies can sell excess "right" to pollution on an open market.
Please post your thoughts and get two points. Ten points to the best case for or against my five points.
2006-06-09
06:45:41
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3 answers
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asked by
Veritatum17
6
in
Economics