Consumer demand and the environment
DOI link for Consumer demand and the environment
Consumer demand and the environment book
A central tenet in microeconomics is that the perfectly competitive market equilibrium leads to the maximisation of net benefits by recourse to the fulfilment of basic functions of what to produce, how much to produce, and how to produce. Environmental goods and services are clear examples of absent markets because of their intangible nature. The corrective measures in environmental economics are ‘market-centric’, which implies that the perfectly competitive market equilibrium may also coincide with the incidence of sustainability. This chapter argues that such coincidence is unlikely and that the benchmark of perfect competition (PC) should be revised to include sustainability as an explicit condition besides the standard ones. The recognition of perfect competition and sustainability prompts the reassessment of comparisons with imperfect market organisations such as monopoly. The comparison of PC with monopoly in standard texts does highlight the case of a deadweight loss that unfolds with a monopoly relative to PC.