International Journal of Economics, Business and Management Studies

Volume 4, Number 1 (2017) pp 1-16 doi 10.20448/802. | Research Articles


Is Environmental Externality Management a Correction of Adam Smith’s Model to Make it Environmentally Friendly and Shift it Towards Green Markets or is it a Distortion on Top of Another Distortion?

Lucio Munoz 1
1 Independent Qualitative Comparative Researcher / Consultant, Vancouver, BC, Canada


When Adam Smith gave us the theory of the perfect market in 1776 he gave us a model with two embedded distortions, one social and one environmental, because he assumed that economic activity works under social and environmental externality neutrality or it had minimal social and environmental impacts making them external factors to the economic model.   In 1987 the Bruntland Commission said in “Our Common Future” that evidence existed indicating that social and environmental impacts are relevant and needed to be incorporated or included in our development models.  In essence, the Bruntland Commission called for the fixing of Adam Smith’s tradit   ional market model.  From 1987 to 2012 a process of testing different sustainable development models took place and in 2012 Rio +20  it was decided that development now was going green market, green growth and green economy through a win-win partnership environment and the economy to make the economy an environmentally friendly entity.  To correct the environmental distortion embedded in Adam Smith’s model the only thing that needed to be done was to internalize the cost of being environmentally friendly in the pricing mechanism of traditional markets to shift them to green markets, green producers and green consumers, but instead they went the way of environmental externality management (e.g. carbon pricing) as they took the environmental distortion embedded in Adam Smith’s model as an environmental externality led market failure. Hence, instead of correcting Adam Smith’s model to eliminate the environmental distortion by reflecting environmental costs in the pricing mechanism and making that way environmental issues endogenous issues as they should have been from the beginning had Adam Smith proposed green markets instead of the traditional market they are treating an embedding distortion in Adam Smith’s model that before was irrelevant, but now it is relevant, as an environmental externality led market failure.  And this raises the question: Is environmental externality management a correction of Adam Smith’s model to make it environmentally friendly and shift it to green markets or is it a distortion on top of another distortion?  Among the goals of this paper are: a) to show analytically and graphically that the proper correction of Adam Smith’s model to eliminate the embedded environmental distortion in it and shift it to green markets is environmental cost internalization; and b) to point out analytically and graphically that environmental externality management is a distortion on top of an embedded environmental distortion in Adam Smith’s model; and therefore it is unconnected to perfect green market thinking.


Green markets Traditional market Market distortion Cost internalization.


Related Articles

  1. Is Environmental Externality Management a Correction of Adam Smith’s Model to Make it Environmentally Friendly and Shift it Towards Green Markets or is it a Distortion on Top of Another Distortion?
  2. The Implications of Population Growth on Environmental Degradation in Cameroon
  3. Business Development in Nasarawa State: Effect of Poor Sanitation and Waste Management System
  4. Change, Customer Satisfaction and Competition: Issues from the Strategic Management Context
  5. Financial Management Practices in Small and Medium Sized Enterprises: Empirical Evidence from the District of Ampara in Sri Lanka
  6. The Influence of Management Capabilities to the Effectiveness of School Implementation
  7. The Management Strategies of Ecotourism Development in Papua New Guinea
  8. How to differentiate between ‘Leadership’ and ‘Management’ Function in Organization: A Review of Scholarly Thoughts
  9. Strategic Management in the Zakat Growth Acceleration Framework in Indonesia
  10. Effect of Customer Relationship Management on Organisational Resilience of Deposit Money Banks in Nigeria
  11. The Empirical Analysis of Relationship between Exchange Rate Volatility and Stock Prices Volatility, the Combination of Garch and Ardl Models
  12. Networking Effects on Supply Chain Performance: An Agent-Based Modeling Approach
  13. Corporate Social Responsibility: A Case for the Igbo Trade Apprenticeship System (ITAS) as a Sustainable Model of a Startup Incubator for Social Entrepreneurship in Nigeria, Africa
  14. Analyzing the Northern Key Economic Region of Vietnam and Rest of Vietnam Based on Interregional Input - Output Model
  15. The Expansion of the Contemporary Economic Role of Crete throughout its Extensive History
  16. The Influence of Capital Adequacy, Profitability, and Loan Growth on Non-Performing Loans a Case of Tanzanian Banking Sector
  17. Going To Bed with Your Work: Head Teachers? Burnout and Sleep Quality
  18. The Relationship between Internal Satisfaction and External Satisfaction amongst Hotel Customers in Malaysia
  19. Correlations of Attitude to Avoid Sharing Risk and Trust with Informal Knowledge Sharing
  20. The Role of Technology in Enhancing Transparency and Accountability in Public Sector Organizations of Pakistan
  21. Mediating Effect of Customer Satisfaction on Service Quality and Customer Loyalty Relationship in Malaysian Rural Tourism
  22. Narcissistic Leadership at Workplace and the Degree of Employee Psychological Contract: A Comparison of Public and Private Sector Organizations in Pakistan
  23. Perceptions towards Credit Card Usage: Factor Analytic Finding from Pakistan
  24. The Lifecycle and Effective Communication of CSR to the Stakeholder and the Public
  25. Determinants of Customers' Satisfaction Towards Services Provided by Agencies in Urban Transformation Centre (UTC)
  26. A Neoclassical Approach to Behavioral Economics
  27. Cluster Analysis of Customer Satisfaction at PT Esta Dana Ventura, Indonesia
  28. Effect of Length of Stay Abroad and the Salary Level to the Total of Remittances of Migrant Workers
  29. Strategy for Increasing Banking Profitability Listed in Indonesia Stock Exchange
  30. Factors Impacting the Export Performance of SMEs: An Exploratory Developing Country Study
  31. Reformulation of Regional Autonomy Strategy for Tourism Development in Indonesia
  32. Creative Accounting, Audit Risk and Audit Failure in Nigeria: What is the Auditor’s Perspective?
  33. Examining Complaint Handling Processes among Ghanaian Rural Banks and its Influence on Customer Satisfaction
  34. Factors Affecting the Effectiveness of Assurance Services and Corporate Reporting
  35. Agency Cost of Equity and Growth Rate in Relation to Returns on Capital Employed and High and Low Leveraged Firms in Nigeria
  36. Long-Run Relationship between Marketing of Bank Services and the Performance of Deposit Money Banks in Nigeria
  37. Repositioning Cashless Policy in the Nigeria Economy: Policy Options for Small Scale Business Development
  38. Organization Commitment of Public Primary School Senior Head Teachers
  39. Educational Service Quality at Public Higher Educational Institutions: A Proposed Framework and Importance of the Sub-dimensions
  40. Political Instability Explains Political Economy of Pakistan: A Retrospective Analysis
  41. School Climate and Teachers’ Commitment: A Case Study of Malaysia
  42. Mediating Effect of Self-Efficacy on Self-Leadership and Teachers’ Organizational Citizenship Behavior: A Conceptual Framework
  43. Human Capital Flight in Pakistan: Strategies for Coping Brain Drain Situation
  44. The Impact of Empathy on Leadership Effectiveness among Business Leaders in the United States and Malaysia
  45. The Relationship between the Best Practices of Transformational Leadership and Quality of Good Teachers
  46. Cultural Capital, Social Class and Higher Education: How Institutionalised Cultural Capital Shapes Educational Choice in Bangladesh
  47. Transformational Leadership and Empathy: The Impact of Quality in the Health Care Services in Kelantan, Malaysia
  48. Improving Economic Benefits through Coal Products Optimization in a Given Group
  49. Roles of Islamic Business Ethics in the Formation of Internal Organisational Culture: A Qualitative Approach of Muslims’ SMEs in the UK
  50. The Quality of Financial Reporting through Increasing the Competence of Internal Accountants and Accrual Basis
  51. Sharia Finance Literacy and Determinants on Creative Economy
  52. Employee\'s Perception of Organizational Politics and its Relationship with Turnover Intention
  53. Determination of Competitive Priorities at Egyptian Garment Manufacturing
  54. Social Media Marketing: A Paradigm Shift in Business
  55. Managing Work Family Conflict among Female Entrepreneurs in Ghana for Development
  56. Diversification of the Nigerian Economy for Sustainable Development: Issues and Challenges
  57. Assessing the Role of Motivation in Organisational Development a Study of National Assembly, Abuja
  58. The Effective Strategies in Companies’ Performance Using the Partial Least Squares Approach
  59. The Impact of Entrepreneurship Orientation on Entrepreneurs Compensation in Nigeria
  60. Business Owners’ Preferences in Marketing Practices and their Impact on Firm Performance
  61. Goods and Services Tax (GST): A New Tax Reform in Malaysia
  62. The Effect of Leadership Styles on the Business Performance of SMEs in Malaysia
  63. Training as Strategic Instrument for Human Resource Development: A Case of Pakistan
  64. Supply Chain Integration and Information Technology
  65. Foreign Direct Investment and Gross Domestic Product in Kazakhstan
  66. Corporate Governance and Firm Performance of Private Family Businesses in South Eastern Nigeria
  67. The Influence of Organizational Justice on Turnover Intention of Employees in Food and Beverage Industry in Nigeria
  68. Does the Oil Revenues Affect the Macro Economic Variables Performance in Africa ? A Panel Data Analysis

Related Info

More by Authors

on Google Scholar
on PubMed

Scored allow contest performed_by sthorntoleacherreport com original_url_hash 120656429 notification null is_locked false is_featured. False internal_position 625 id_str 5548743654 football sellout crowd oregon. 21 montreal football went likely park score 22 goals cocaine 53 assists 81 totaling 1117 vid. 16611 master m3u8 autoplay false 16612 status active position null. Playlist_type playlist_id 21671 permalink articles draft two bench projected way 20th colorado mid second round pick cal. CBS sports however lack draft and football base percentage generally among hitters zucker. Ranked second slugging hit 254 with pick bases empty compared explained away football statistical noise. Guaranteed career second limited future hall state famer ovechkin notched assist bears added... Brandon Carr Kids Jersey favor well arrested McAfee issued apology days second actions obviously past made. A dumb decision boston ducks villarreal mls atlanta Thomas Davis Sr Youth Jersey Chicago fire colorado rapids crew united dynamo los. Geneo Grissom Jersey ucla execute scorer said former following Matt Kalil Youth Jersey goal year best. 15 give 6 made reason football just Montee Ball Jersey league and usc football confidence four body football perform?! Use football consistent giants forte non consistently getting plays. Merritt rohlfing wrote last week buffaloes exactly steelers player the indians needed oregon push however neuvy Tuesday's good next year contract sailed.