Economics, by R经济学研究. Glenn Hubbard and Anthony Patrick .pptVIP

Externalities, EnvironmentalPolicy, and Public Goods Externalities and Efficiency Externalities and Efficiency Externalities and Efficiency Externalities and Efficiency Private Solutions to Externalities: The Coase Theorem Private Solutions to Externalities: The Coase Theorem Government Solutions to Externalities Four Categories of Goods Four Categories of Goods Public Goods and Common Resources Coase theorem Command and control approach Common resource Excludability Externality Free riding Market failure Pigovian taxes and subsidies Private benefit ? 2006 Prentice Hall Business Publishing Economics R. Glenn Hubbard, Anthony Patrick O’Brien—1st ed. CHAPTER 5: Externalities, Environmental Policy, and Public Goods five c h a p t e r Prepared by: Fernando Yvonn Quijano LEARNING OBJECTIVE 1 Externality A benefit or cost that affects someone who is not directly involved in the production or consumption of a good or service. The Effect of Externalities Private cost The cost borne by the producer of a good or service. Social cost The total cost of producing a good, including both the private cost and any external cost. Private benefit The benefit received by the consumer of a good or service. Social benefit The total benefit from consuming a good, including both the private benefit and any external benefit. HOW A NEGATIVE EXTERNALITY IN PRODUCTION REDUCES ECONOMIC EFFICIENCY 5 - 1 The Effect of Pollution on Economic Efficiency HOW A POSITIVE EXTERNALITY IN CONSUMPTION REDUCES ECONOMIC EFFICIENCY 5 - 2 The Effect of a Positive Externality on Efficiency Externalities Can Result in Market Failure Market failure Situations where the market fails to produce the efficient level of output. What Causes Externalities? Property rights The rights individuals or businesses have to the exclusive use of their property, including the right to buy or sell it. LEARNING OBJECTIVE 2 The Economically Efficient Level of Pollution Reduction 5 - 3 The M