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The Old Lady Visits Your Backyard: A Tale of Morals and Markets
Bruno S. Frey University of Zurich - Faculty of Business Administration - Institute for Empirical Research in Economics (IEW); CESifo (Center for Economic Studies and Ifo Institute for Economic Research); Swiss Federal Institute of Technology Zurich Felix Oberholzer-Gee Harvard Business School, Strategy Unit Reiner Eichenberger University of Fribourg (Switzerland) - Faculty of Economics and Social Science JOURNAL OF POLITICAL ECONOMY, Vol. 104, No. 6, December 1996 Abstract: Local opposition to many projects makes it increasingly difficult to find sites for socially desirable facilities. As has been widely documented, compensation for local disamenities does not increase the level of support. An empirical analysis of the Swiss search for a nuclear waste repository even reveals decreased acceptance due to the rejection of bribes and the crowding-out of public spirit. However, a "compensation cycle" may be exploited to finally win the support of host communities. As siting issues are decided in the realm of politics, an economic theory of compensation must focus on the interplay between morals and markets.
JEL Classifications: H41, Q20 Accepted Paper SeriesDate posted: November 19, 1996 ; Last revised: February 10, 1998Suggested CitationContact Information
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