Market transformation: an essential condition for sustainability

Abstract

The market is a good instrument for distribution of goods but can be a bad allocator of resources. This phrasing is just a general description of common knowledge and practice in most countries and has been better put by the Czech author and President, Vaclav Havel, in the words: “The market is a good servant but a bad master.” The possibility of influencing and changing the marketplace is hardly new to economists and certainly not beyond controversy. What might be new is environmental concern as a reason for the “intervention” and also some new modes of activity. The “intervention” is nowadays more in accordance with the market's way of functioning, using natural incentives and the commercial forces built into company and market behaviour. It is frequently argued that different taxes and financial instruments are clean and silent mechanisms. The effectiveness of such techniques has however been put in doubt, and in this paper the more active method of establishing a demand pull, as trigger for a supply push, resulting in a market transformation, will be advocated, and further some successful achievements shown.