The Analysis Of The Externality Of Environmental Pollution And The Selection Of Solutions

Nowadays environmental pollution has become a very important problem thatinfluences and restricts the constant development of domestic economy. In this articlethe economic reasons of environmental pollution are discussed, which indicate thatthe present environmental problems result from their externality. If the externality isinternalized, the problems will be solved. Then foreign management experience ofdealing with environmental problems is reviewed. Meanwhile, some representativepoints of views of famous economists, such as Pigou and Coase, are mentioned in thearticle. The ways to internalize the externality of environmental pollution can bedivided into two categories: one is to control by order;the other is by economicstimulation, which is composed of Pigou approaches and Coase approaches. It isshown that the way by order and the Pigou approaches are not effective on getting ridof environmental pollution due to their internal limitations through comparison andanalysis. In contrast to that, the internalization of the externality can be achieved toprotect environments more effectively by Coase approaches since they nail downproperty rights and emphasize market roles while they have relatively strongmechanism of constraint and stimulation. Finally some premises are raised for theexecution of the Coase approaches according to the actual situation in China. It saysthat the favorable environments for property right transactions should be establishedwith the help of the government so that markets can play the role of resourceallocation under the supervision of the government.