How Public Policy Can Define the Marketplace: The Case of Pollution Liability Insurance in the 1980s

Using the case of pollution liability insurance, this paper describes how public policy can both stimulate and negate marketplace functions. The paper focuses on the role of marketing in public policy and illustrates that if public policy decision makers do not incorporate explicit consideration of both buyer and seller motivations, as well as other marketplace realities, they can work against their own objectives and stifle exchange. Prescriptive solutions to the availability crisis in pollution liability insurance are also presented.