Impact of the Environmental Requirements on the Industrial Product Prices

Abstract

Summary:

In the system of market economy, producers seek to minimize costs and maximize profits, while consumers tend to maximize certain benefits. Doing business under increasingly complex circumstances requires that the manufacturer, or the industrial enterprises, take into account the need to meet growing public demands with regard to achieving a certain level of environmental quality. This means that the environmental component plays an ever more important role in companies’ overall costs, as well as in their profit, because their product must be competitive in terms of selling price. If the costs of resolving environmental problems become equal to or exceed an industrial product’s selling price, the survival of such products, and thus the company that produces it, is questionable. Therefore, environmental problems should not be dealt with in an "ad hoc" manner, but systematically and systemically. This is the major hypothesis on which this paper is based. Specifically, this paper is an attempt to prove that the economic optimum is not always equal to the environmental optimum.