Social and Behavioral Sciences Commons^™

A basic premise in economics is that companies should pay all of the costs that are incurred in the process of producing their goods and services. The reason? By incurring all of the costs in production, the price charged by the company will reflect those costs. The price consumers pay, then, will also reflect all of the costs incurred in production. This leads to price efficiency, a major goal in free-market economic principles.

Unfortunately we don’t always include the costs to the environment in the production process. Take, for example, electricity generation, which can be accomplished using different inputs. Coal-burning …