Charging the earth: The promotion of price-based measures for pollution control

Abstract

This paper seeks to consider the ways in which the theory and application of economic instruments, in particular price-based instruments, is shaped by the interests, values and ideologies of those who are promoting and implementing them. Although economists have been advocating the use of economic instruments for pollution control for decades, it is only in recent years that they have been embraced by business groups and governments looking for a way to avoid stricter and more costly regulations that might inhibit economic growth, and as a way of correcting, and therefore preserving the free-market system. This paper examines the rationale for price-based instruments and explains how economists have managed to enroll the support of other interest groups, even those that have conflicting interests.