Market simulation and the provision of public goods: a non-paternalistic response to anomalies in environmental evaluation

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Most normative economics assumes that individuals have coherent preferences. This paper responds to growing evidence of failures of this assumption, particularly in the context of stated-preference methods widely used in environmental policy analysis. It proposes a non-paternalistic concept of consumer sovereignty that does not assume preference coherence, is satisfied by competitive markets, and can be applied to the provision of public goods. A key implication is that decisions should reflect valuations revealed ‘at the point of consumption’. Such valuations, which can be inferred from hedonic prices, may be less susceptible to willingness-to-accept (WTA)/willingness-to-pay (WTP) disparities than those elicited by stated-preference methods.
Original languageEnglish
Pages (from-to)87-103
Number of pages17
JournalJournal of Environmental Economics and Management
Issue number1
Publication statusPublished - Jan 2009


  • Market simulation
  • Public goods
  • Paternalism
  • Environmental evaluation

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