MARKET STRUCTURE AND EXTERNALITIES: THE CASE OF WATER POLLUTION IN ENGLAND AND WALES.

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Bibliographic Details
Title:	MARKET STRUCTURE AND EXTERNALITIES: THE CASE OF WATER POLLUTION IN ENGLAND AND WALES.
Authors:	Storey, D. J.¹
Source:	Journal of Industrial Economics. Dec78, Vol. 27 Issue 2, p149-162. 14p.
Subjects:	Water pollution, Water pollution control industry, Cost effectiveness, Water quality, Externalities, Industrial efficiency, Industrial organization (Economic theory)
Geographic Terms:	United Kingdom
Abstract:	The article examines the theories of market structure and externalities in the case of water pollution in Great Britain. A major criticism of externality theorists is their presumption that all polluters are profit maximizers (cost minimizers) operating in a perfectly competitive selling market. If the firm is spending only a little the authority will spend more. Thus the profit-maximizing firm can contest the consent conditions imposed by authority and be better off, but the outcome, a priori, is uncertain. Hence the hypothesis is presented that the less competitive industries will receive more favorable treatment from the enforcing authority. Since society as a whole has, over the past decade, shown a greater interest in the environment this might be reflected in a greater consciousness of industrial management of their social responsibilities. Since there is no a priori reason why firms in the medium concentrated industries should have significantly higher or lower costs of abatement than other firms this study represents further support for those arguing that water quality improvement has not been achieved in a cost-effective manner. Finally it should be realized that anti-trust policies, whilst they may increase social welfare by the introduction of greater competition designed to reduce product prices may simultaneously increase social damage from pollution through reducing the opportunity for discretionary expenditure on abatement.
Database:	Engineering Source

Description
Abstract:	The article examines the theories of market structure and externalities in the case of water pollution in Great Britain. A major criticism of externality theorists is their presumption that all polluters are profit maximizers (cost minimizers) operating in a perfectly competitive selling market. If the firm is spending only a little the authority will spend more. Thus the profit-maximizing firm can contest the consent conditions imposed by authority and be better off, but the outcome, a priori, is uncertain. Hence the hypothesis is presented that the less competitive industries will receive more favorable treatment from the enforcing authority. Since society as a whole has, over the past decade, shown a greater interest in the environment this might be reflected in a greater consciousness of industrial management of their social responsibilities. Since there is no a priori reason why firms in the medium concentrated industries should have significantly higher or lower costs of abatement than other firms this study represents further support for those arguing that water quality improvement has not been achieved in a cost-effective manner. Finally it should be realized that anti-trust policies, whilst they may increase social welfare by the introduction of greater competition designed to reduce product prices may simultaneously increase social damage from pollution through reducing the opportunity for discretionary expenditure on abatement.
ISSN:	00221821
DOI:	10.2307/2097994