Economic Benefit Assignment in Environmental Cost Allocation: Toward a Suggestion Model

This paper aims to suggest a model to reward a ‘dirty product’ whichhas the potential to offer sales promotion services to other ‘clean products’in a multiple product firm. The paper suggests a model – economicbenefit assignment (EBA) for apportionment of direct wastecosts where a polluting product offers a sales promotion benefit to other‘clean products’ of the same company, which proposes that benefitingproducts should be assigned a proportion of the direct waste cost ofthe polluting product (as a service charge) based on the proportion ofpromotion benefit (sales benefit) received from the polluting product.The idea is that, based on transfer pricing theory, such promotion servicewould be paid for, if offered by an outside agent. Whilst academicdebate is expected to ensue from this suggestion model, further caseresearch is imperative to demonstrate industrial applicability.