In the past, the environmental pollution caused by one-sided pursuit of economic growth efficiency has become the focus of global attention. In the new century, in the process of rapid economic growth in China, the continuous deterioration of the ecological environment has not been effectively curbed. How to draw lessons from western economic theory and combine with the reality of China, formulate effective environmental economic policies, internalize the negative externalities of environmental pollution, implement the Scientific Outlook on Development, establish a resource-saving and environment-friendly society, and promote the coordinated and sustainable development of human production and consumption activities and natural ecosystems is an urgent problem for us to solve. This paper discusses the theoretical origin, characteristics and applicability of internalization paths of environmental and economic externalities, such as pollution charge system and emission trading system, in China.
1. Externality and its causes
Many scholars have discussed the meaning of externalities. Daniel Spobo (Daniel
Spulber) defines externality as: "A certain externality refers to the bundle of goods provided by one party to the other without any relevant economic transactions between the two parties."
Joseph stiglitz (1)
Stiglitz) thinks: "Externality occurs when the behavior of an individual or manufacturer directly affects others, but it is not paid or compensated", or "the extra costs and extra benefits that are not reflected in market transactions are called externalities" [2]. According to PaulASamuelson's understanding, "when someone is imposed with involuntary costs or profits in the process of production and consumption, externalities will occur." More precisely, externality is the influence exerted by an economic institution on the welfare of others, which is not reflected in market transactions "[3]. Based on the above point of view, the meaning of externality refers to the non-market influence brought by the activities of producers or consumers to other producers or consumers in actual economic activities. This effect comes from the comparison between private benefits and social benefits, private costs and social costs. Positive externality (or external economy) refers to the positive impact of an economic behavior on the outside world, which makes others reduce costs and increase profits. Negative externalities (or external diseconomy) refers to the phenomenon that social costs are greater than private costs in economic activities because decision makers bring extra costs or burdens to others or society in addition to their own costs. Externality related to environmental problems is mainly the external diseconomy of production and consumption, especially the external diseconomy of production. It will lead to the inefficient allocation of social resources and the negative impact of ecological environment pollution and deterioration.
The reasons for external diseconomy are complicated, but mainly include the following three aspects:
First of all, "market defects" lead to external diseconomy. Classical economists believe that the market is an invisible hand, which objectively promotes social welfare and guides self-interested people to seek their own interests. Egoism is not only harmless to society, but even more beneficial to social welfare than social care. However, there is a certain premise, or a certain scope, for the market mechanism to play its role, that is, the property rights must be clear first. In the field of unclear property rights or public property rights, due to the role of self-interest, "tragedy of the commons" will inevitably continue to be staged, that is, there will be a large number of "hitchhiking" phenomena, leaving the benefits to themselves and passing on the disadvantages to society.
In the field of environment, it is a typical example of external diseconomy that enterprises discharge "three wastes" into the environment at will. Because polluters don't have to bear the cost of eliminating the adverse effects on others, their private cost is less than the social cost. In this way, polluters only choose the "optimal" output from their own private costs or private benefits, and they have the motivation to overproduce. This shows that the profit maximization behavior of competitive enterprises can not automatically lead to effective resource allocation under the external effect. It can only maximize the welfare of some individuals, but not the welfare of society.
Second, "fuzzy property rights" leads to economic externalities. Because resources and environment belong to the category of public goods, public goods have the characteristics of non-exclusive and non-competitive consumption, that is, property rights are usually unclear, which means that the transaction cost of establishing property rights and markets in the field of environmental resources is too high. For example, it is difficult to establish effective property rights for marine fishery resources, especially those migratory fish resources. Even if property rights are defined, it is difficult to supervise and protect them. Such environmental resources, the consequences of personal loss and destruction are shared by the society, which will stimulate a single interest subject to overuse it for the sake of maximizing its own interests, leading to the emergence of negative economic externalities.
Third, externalities arise under "decentralized interests". Whether it is a market economy or a planned economy, economic activities are scattered, and each economic subject has its relative independence in interests. Because consciously increasing external costs is closely related to the reduction of private internal costs, or sometimes due to some convenience considerations in the production process, manufacturers usually only consider internal costs and benefits, while ignoring corporate social responsibility. Even if some manufacturers are willing to take some social responsibilities subjectively and minimize the negative impact of economic activities on society, under the general constraint of law enforcement, as long as they can't find a way to reduce external impact without increasing private costs, the effect of "bad money driving out good money" caused by fierce and irregular market competition will still force them to drift with the flow.
2. Theoretical origin of different paths of internalization of environmental economic externalities.
Because of the different understanding of the causes of externalities, western economic theories have put forward different solutions. This paper focuses on the basic viewpoints of Pigou and Coase.
Pigou (Arthur Cecil)
Pigou) pointed out in the book Welfare Economics published in 1920 that in economic activities, if one manufacturer causes losses to other manufacturers or the whole society without paying the price, it is external diseconomy. At this time, the marginal private cost of the manufacturer is less than the marginal social cost. When this happens, the damage cannot be solved by the market, that is, the so-called market failure, and the external problems must be solved by the direct intervention of the government. Specifically, it is necessary to internalize external costs through government actions on external occasions and stabilize production at the optimal level in society. Pigou pointed out that if the marginal private net output value of each production factor is equal to the marginal social net output value, and the marginal social net output value of all production purposes is equal, it means that the resource allocation is in the best state. When the marginal private net output value deviates from the marginal social net output value, it is impossible to maximize social welfare by relying on free competition. Therefore, the government should adopt appropriate economic policies to eliminate this deviation. The economic policies that the government should adopt are as follows: (1) to levy taxes on departments whose marginal private net output value is greater than marginal social net output value, so as to force manufacturers to reduce production; Rewards and subsidies will be given to departments whose marginal private net output value is less than marginal social net output value to encourage manufacturers to increase production. Pigou believes that the internalization of external effects can be realized through such taxes and subsidies. This policy proposal was later called PigouTax.
1960, Professor Coase of the University of Chicago (Ronald
Coase) published a famous paper "Social Cost Problem". In this paper, he proved that Pigou is completely wrong under the condition of zero transaction cost, because no matter how the initial rights are distributed, the final resources will be used most valuable, and rational subjects will always take spillover costs and benefits into account, so the social cost problem will no longer exist. Coase believes that externalities are not the inevitable result of the market system, but because property rights are not clearly defined, effective property rights can reduce or even eliminate externalities. Coase further develops it into the so-called Coase theorem, that is, as long as property rights are clear, contracts between private individuals can also solve externalities and realize the optimal allocation of resources. Through the analysis of the case that "the lost cattle damaged the grain growth in the neighboring area", he put forward his main arguments to solve the external problem, that is, the damage problem: First, the damage problem is mutual. Second, through free market transactions, rights can be rearranged to maximize the value of output. It can be seen that Coase believes that the key to solving the problem is that as long as the transaction cost is zero and the property rights are clear, private individuals can reach an agreement to make the marginal private net output value of economic activities equal to the marginal social net output value, and the root causes of externalities are eliminated.
Studying Coase's and Pigou's viewpoints, we can find that the difference lies in whether the scope of government behavior is large or small, and whether the intervention means is direct or indirect. Coase theory holds that the role of government is only to make property rights clear, and private market transactions should be allowed to achieve efficient results. Pigou believes that due to technical reasons and transaction costs, the market cannot cover the whole society, and the scope of market mechanism is limited. On the issue of environmental externalities, we should rely more on the role of the government, and the direct intervention of the government is the most effective and realistic choice.
3. Comparative analysis of the internalization path of environmental economic externalities
Environmental economic means is a kind of policy means that the national environmental administrative department guides the economic parties to make choices from the perspective of influencing the cost and benefit, and finally benefits the environment. Because of the differences between Coase and Pigou in the path of internalization of externalities, the corresponding path to solve environmental problems can be divided into market mechanism and government intervention. Economic theorists call the environmental economic means to solve environmental problems mainly through direct government intervention Pigou means, while the environmental economic means to solve environmental problems mainly through government market mechanism is called Coase means. Pigou means include taxes, subsidies and deposit refund; Coase's methods include private contracts and emissions trading.
In modern economic life, pollution charges in Pigou sense and emission trading in Coase sense have played an important role in pollution control. Both paths are total pollutant control, but each path has its own applicable conditions in actual operation. When choosing pollution control measures, we must consider whether these conditions are met.