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THE INTERNALISATION OF ENVIRONMENTAL EXTERNALITIES AFFECTING DWELLINGS: A REVIEW OF COURT CASES IN HONG KONG
Author(s) -
Li Rita Yi Man
Publication year - 2012
Publication title -
economic affairs
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.24
H-Index - 18
eISSN - 1468-0270
pISSN - 0265-0665
DOI - 10.1111/j.1468-0270.2012.002160.x
Subject(s) - externality , coase theorem , compensation (psychology) , transaction cost , social cost , damages , database transaction , economics , high court , public economics , business , microeconomics , law , political science , psychology , computer science , programming language , psychoanalysis
In 1960, Ronald Coase suggested that there are many methods to solve the problem of externalities apart from imposing Pigovian taxes. Internalisation is one of those noted in his classic paper, ‘The Problem of Social Cost’. This paper studies the possibility of residents receiving compensation from pollutant generators. Data collected from Hong Kong law reports over the past 20 years show that there is forty‐fold increase in number of water seepage court cases since the first case in 1994. The total amount of compensation has also increased greatly. There are, however, far fewer court cases where residents seek compensation from generators of noise and air pollution. This may reflect a combination of high transaction costs and low expected benefits from such cases.