Full-cost pricing could potentially mitigate many of the detrimental impacts associated with resource waste, pollution and other environmental problems. Why isn't full-cost pricing widely used? What could be done to overcome these problems?
What will be an ideal response?
There are several reasons why full-cost pricing has not been widely embraced. First, many producers of harmful or wasteful products would have to dramatically raise their prices. Such increases may drive the producers out of business. Also, the economic consequences of many harmful products can be difficult to quantify, and therefore difficult or impossible to price accordingly. Last, many producers have considerable political or economic power and use that power to extract subsidies from the government. These issues could be overcome if full-cost pricing is implemented slowly, over one or more decades. Such a long phase-in period would allow producers and consumers to plan for and adapt to new economic realities.
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