Environmental Market Failures: Are There Any Local Market-Based Corrective Mechanisms for Global Problems?

The paper reviews various policy tools that have been discussed in the literature, including legal, administrative and fiscal (tax) schemes, as well as tradeable emission permits, and concludes that none of them are really suitable for dealing with global problems. An alternative is suggested, namely the use of tradeable individual consumption quotas for traded commodities at the national level, to be extended later to the global level by trading quotas among nations (assuming agreement can be reached on the basis for determining quotas). This revised version was published online in August 2006 with corrections to the Cover Date.