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Theoretical perspectives or “behind the scenes” of economics and science
Published in Sigrun M. Wagner, Business and Environmental Sustainability, 2020
Externalities are benefits that are unpaid for or uncompensated costs that occur as a by-product of production or market exchanges and impact society (Hackett 2011). They are external as they are not represented in the classical model of market demand and supply. As a consequence these unintentional side effects of consumption and production are not reflected in the price of goods (Nemetz 2013). A distinction is made between positive externalities and negative externalities. As the (marginal8) private cost or benefit does not equal the (marginal) social cost or benefit, products or activities with negative externalities tend to be underpriced and overproduced while for goods or services with positive externalities, the opposite is the case – they tend to be overpriced and underproduced (Nemetz 2013). Social benefits comprise the sum of private and external benefits, whereas social costs are equal to the sum of private costs (paid by producers) and external costs, normally born by society (Hackett 2011). Social costs therefore include all costs that are associated with producing one good or service, including externalities. The relevance of externalities to corporations should therefore be obvious – it is their decisions that generate much of these costs (Nemetz 2013).
Is decoupling possible?
Published in John Gusdorf, Ecological Living, 2019
Quotas and extraction taxes are a way of “internalizing externalities.” Externalities are side effects of economic activity, the costs of which are not included in the prices of goods or services produced by that activity. An example of a positive externality is a beekeeper whose bees pollinate nearby orchards for free. Most externalities are negative, and pollution and other forms of environmental damage are the main examples. Economists often propose internalizing externalities by pollution taxes. The company producing pollution would pay a tax based on the harm it does, and this tax would provide an incentive to reduce its pollution. The problems with pollution taxes include the needs to measure all the significant types and amounts of pollution, to determine how much harm each one is doing, and to assign dollar values to health, peace and quiet, beautiful surroundings, and functioning ecosystems. Decoupling incentives are much simpler to implement, and they get at the source of extraction and pollution, not its effects. Decoupling incentives would not exclude pollution taxes (or fines or prohibitions) for certain cases as long as they are still needed.
Is There an Ethical Obligation to Act Sustainably?
Published in Jean Russ, Sustainability and Design Ethics, 2018
The difficulty we face is ultimately that environmental values are usually not expressed in economic terms. The two systems, economy and environment, are treated as if they exist apart from one another, distinct, unaffected by one another, but, of course, they are not. Sustainability in the end is a means of conducting environmentally sound economic activity for socially desirable outcomes. Too often, environment and economy are considered as diametrically opposed to one another, a question of clean environment or healthy economy. There is nothing inherent in either, however, that precludes or excludes the other. The challenge lies in our definitions of quality. Economists are concerned because it is our economic behavior that must accommodate the change. Sustainability requires a long view. If we are to become sustainable, the scope of our economic considerations must extend to include our impact on the environment and on the future. In short, we must begin to incorporate the externalities of our economic activity into the costs and undertake some consideration of intergenerational equity. Externalities are those costs or benefits of a good or service that are not included within its price. A negative externality might be the costs of health care or lower property values imposed on a community by a polluting factory. Clearly, concepts such as free goods and discounting must be evaluated with some thought to the future as well as the short-term environmental impact. Accounting for the externalities of our actions is among the most basic principles of our sustainable future.
Optimization of unsubsidized and subsidized customized bus services
Published in Transportation Planning and Technology, 2023
Siqing Wang, Jian Wang, Xiaowei Hu
Optimal pricing is a demand management tool that aims to maximize social welfare by setting prices that balance the marginal social cost (MSC) of providing the service with the marginal benefit customers receive from using it. The MSC of a trip in customized transit is the additional cost imposed on society by one additional passenger taking a trip. It depends on several factors, including the operating cost of the vehicle and the cost of any externalities associated with the trip. These externalities include congestion, pollution, and accidents. In customized bus services, the peak MSC is typically greater than the off-peak MSC due to increased congestion and higher demand for transportation services during peak periods. As more passengers take trips during peak periods, transportation externalities increase, leading to an increase in MSC. Moreover, the vehicle's operating cost per passenger may also rise during peak periods due to higher fuel consumption and excessive wear and tear on the vehicle. To address these issues, pricing policies in customized transit may use time-of-use pricing, which charges higher prices during peak periods to discourage excessive demand and encourage alternative modes of transportation. These pricing policies can reduce the peak MSC and promote the more efficient use of transportation resources.
Smart city for sustainable urban freight logistics
Published in International Journal of Production Research, 2021
Shenle Pan, Wei Zhou, Selwyn Piramuthu, Vaggelis Giannikas, Chao Chen
The main objective of city logistics is to improve the effectiveness and efficiency for shippers, service providers and customers. Since the last decade, sustainable development has become a contemporary and significant objective to city logistics stakeholders. Under the paradigm of sustainability, the goal is to reduce the negative externalities of logistic activities, while ensuring service coverage and improving quality of life of all inhabitants at the city level (Anderson, Allen, and Browne 2005). Typical negative externalities include those from transport activities such as CO2 emissions, climate change, congestion, noise, accidents and air pollution (as defined in the handbook; European Commission 2019a). It also includes other issues such as land use and working conditions for human labour. Balancing the economic, social and environmental objectives, which are sometimes contradictory, remains critical for logistics service providers. Meanwhile, policy makers and municipalities become increasingly more concerned with the environmental and social impacts of city logistics. As a result, the conventional best practices for city logistics are often challenged in this new context.
Cybersecurity investments in a two-echelon supply chain with third-party risk propagation
Published in International Journal of Production Research, 2021
As we know, externalities will bring the underinvestment or overinvestment in security and further contribute to the investment inefficiency of the whole network. In recent years, many studies have proposed some solutions to internalise externalities, such as security cyberinsurance and managed security services (MSSs) (Zhao, Xue, and Whinston 2013; Feng et al. 2019). However, these solutions are mostly adopted for firms' self-protection and are difficult to fundamentally solve the investment inefficiency caused by security externalities (Shetty et al. 2010; Cezar, Cavusoglu, and Raghunathan 2017; Dou et al. 2018). One can try to develop a set of economic incentives or coordination mechanisms to internalise the externalities (Kunreuther and Heal 2003; Wu et al. 2015). Therefore, this paper discusses the effects of three mechanisms on mitigating investment inefficiency: joint decision, security risk compensation, and security information sharing.