The Old Lady Visits Your Backyard: A Tale of Morals and Markets

JOURNAL OF POLITICAL ECONOMY, Vol. 104, No. 6, December 1996

Posted: 19 Nov 1996

See all articles by Bruno S. Frey

Bruno S. Frey

CREMA; University of Basel

Felix Oberholzer-Gee

Harvard Business School, Strategy Unit

Reiner Eichenberger

University of Fribourg - Faculty of Economics and Social Science; CREMA

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 Classification: H41, Q20

Suggested Citation

Frey, Bruno S. and Oberholzer-Gee, Felix and Eichenberger, Reiner, The Old Lady Visits Your Backyard: A Tale of Morals and Markets. JOURNAL OF POLITICAL ECONOMY, Vol. 104, No. 6, December 1996. Available at SSRN: https://ssrn.com/abstract=4443

Bruno S. Frey

CREMA ( email )

Südstrasse 11
Zurich, CH 8008
Switzerland
+41 44 380 00 78 (Phone)

University of Basel ( email )

Peter Merian-Weg 6
Basel, 4002
Switzerland

Felix Oberholzer-Gee (Contact Author)

Harvard Business School, Strategy Unit ( email )

Soldiers Field Road
Morgan 270C
Boston, MA 02163
United States

Reiner Eichenberger

University of Fribourg - Faculty of Economics and Social Science ( email )

Fribourg, CH 1700
Switzerland

CREMA ( email )

Gellertstrasse 18
Basel
Zurich, CH 8006
Switzerland

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