Frontiers of Environmental Economics
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Frontiers of Environmental Economics

Edited by Henk Folmer, H. Landis Gabel, Shelby Gerking and Adam Rose

Top European and American scholars contribute to this cutting-edge volume on little-researched areas of environmental and resource economics. Topics include spatial economics, poverty and development, experimental economics, large-scale risk and its management, organizational economics, technological innovation and diffusion and many more.
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Chapter 11: Corporate governance in the presence of major technological risks

Marcel Boyer and Bernard Sinclair-Desgagné


Marcel Boyer and Bernard Sinclair-Desgagné 1 INTRODUCTION Most analysts and forecasters of the new economy adopt an optimistic view of technology. Together with globalization, technology is seen as the main engine of economic growth. It lies at the heart of the ‘knowledge-based economy’. And it provides comforting answers to the advocates of pessimistic scenarios based on climate change, natural resource depletion, endangered species and overpopulation. Technology, however, does not only yield benefits. The other side of the coin is that, first, technology itself often produces new hazards, such as industrial accidents and pollution.1 Secondly, by increasing the power of mankind over nature, technology also exacerbates the impact of human errors, as the deadly gas leak at Bhopal, the Exxon-Valdez oil spill and the threat of extensive destruction posed by modern warfare dramatically illustrate. Finally, technology often increases the extent of damages linked to natural events. This was shown in the Durunqa disaster of 1994, in Egypt, when over 100 people were killed by floods that destroyed a petroleum storage facility and carried burning oil into the heart of the town (Smith, 1996, p. 266), and also in the January 1998 ice storm that hit southern Québec, provoking a huge blackout which left more than 3 million electricity-dependent people without heat and power in the middle of the Canadian winter. Several institutions and management systems have therefore progressively been designed and implemented in order to control technological risks and enhance the net benefits associated with technological development.2 There...

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