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Ethical limitations of social cost pricing: an application to power generation externalities
Luleå University of Technology, Department of Business Administration, Technology and Social Sciences, Social Sciences.ORCID iD: 0000-0003-2264-7043
Luleå tekniska universitet.
2000 (English)In: Journal of Economic Issues, ISSN 0021-3624, E-ISSN 1946-326X, Vol. 34, no 2, 453-462 p.Article in journal (Refereed) Published
Abstract [en]

The article focuses on ethical limitations of social cost pricing and an application to power generation externalities. According to neoclassical economic theory, the valuation of different externalities is necessary for assisting market processes and for socially efficient choices. For example, environmental effects that are unpriced in any market need to be assigned hypothetical monetary values. Taxes and subsidies that reflect these external costs will then ensure that profit-maximizing firms select the mix of goods and production technologies that best satisfy environmental and economic goals. The basic thesis of this paper is that monetary valuation of environmental externalities relies on specific ethical foundations, it is useful to review these before concluding remarks. Environmental valuation of power-generation externalities, it is argued, is necessary for making consistent and meaningful comparisons between technologies. Tradeoffs must always be made, and it is best to make them explicit in a cost-benefit analysis. The main argument in this paper, however, has been that this position assumes that all choices are made on the basis of a utilitarian approach. The purposes of the paper are: to explore some of the ethical limits of neoclassical environmental valuation, and to discuss what the implications are of these limits for the social choice between power-generation technologies. The central message put forth is that the scope of electricity externalities where environmental valuation can be applied from an ethical point of view is likely to be narrower than commonly assumed.

Place, publisher, year, edition, pages
2000. Vol. 34, no 2, 453-462 p.
National Category
Economics
Research subject
Economics
Identifiers
URN: urn:nbn:se:ltu:diva-12243Local ID: b58d44d0-6f51-11db-962b-000ea68e967bOAI: oai:DiVA.org:ltu-12243DiVA: diva2:985193
Note
Validerad; 2000; 20061003 (evan)Available from: 2016-09-29 Created: 2016-09-29 Last updated: 2017-11-24Bibliographically approved

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