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Thinking with Markets

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In this chapter we have learned that:

 A dominant school of thought holds that, as long as environmental goods and services can be sold or traded, scarcity will be diminished by economic forces through the market response model.

 The market response model alleviates scarcity by creating incentives that either increase the supply of environmental goods and services or reduce demand for them.

 Environmental externalities can be mediated, in this theory, through private contracts more efficiently than through regulation.

 Many market-based mechanisms therefore may exist for solving environmental problems, including green taxes, markets for pollution, and green consumer choices.

 Markets, however, can fail, raising questions about holding faith in them for consistently solving environmental problems.

 Other problems face market-based environmentalism, including the fact that some environmental goods are difficult to value, that markets can be volatile and fickle, and that economic solutions are not necessarily democratic ones.

Environment and Society

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