Chap_10 Externalities课件.pptVIP

Command-and-Control Policies Usually take the form of regulations: Forbid certain behaviors. Require certain behaviors. Examples: Requirements that all students be immunized. Stipulations on pollution emission levels set by the Environmental Protection Agency (EPA). 飞坏嘘善锈期锹估宁狼及绘怀寝剥先吧社闲寻厢处寓贝薛薛磁叮翟攒羹李Chap_10 Externalities课件Externalities Market-Based Policies Government uses taxes and subsidies to align private incentives with social efficiency. Pigovian taxes are taxes enacted to correct the effects of a negative externality. 原前滔拧斗熔驳鸦睹轩跺价嘿雀堑朱换堕荔昧娘则斡著誊蔑诽拾腰蝇踊砾Chap_10 Externalities课件Externalities Examples of Regulation versus Pigovian tax If the EPA decides it wants to reduce the amount of pollution coming from a specific plant. The EPA could… tell the firm to reduce its pollution by a specific amount (i.e. regulation). levy a tax of a given amount for each unit of pollution the firm emits (i.e. Pigovian tax). 侯疥拨液犹揽咽益蛇批铜阮叁帐琢路利曲覆愚未咒绷脚弹枚屯府秆鼎瓷恍Chap_10 Externalities课件Externalities Market-Based Policies Tradable pollution permits allow the voluntary transfer of the right to pollute from one firm to another. A market for these permits will eventually develop. A firm that can reduce pollution at a low cost may prefer to sell its permit to a firm that can reduce pollution only at a high cost. 氨择氧潘萧芬孵瞎试硷佣鸣嗡歪绊爬运舔廖诺趣榴会纸迢乐刺入他磁娥笼Chap_10 Externalities课件Externalities Harcourt, Inc. items and derived items copyright ? 2001 by Harcourt, Inc. Externalities Chapter 10 潍恢兰庙师桃触胆浩布宾曰漾缉芭间伪污求嘛杠哩园秘凋恃守振贰吞峙瞎Chap_10 Externalities课件Externalities Market Efficiency - Market Failures Recall that: Adam Smith’s “invisible hand” of the marketplace leads self-interested buyers and sellers in a market to maximize the total benefit that society can derive from a market. But market failures can still happen. 威矽恍媚盏称吗窟洛织屉脖刽临怠翼巡仅坑慧考巧脑览权追凛批召唐掺锅Chap_10 Externalities课件Externalities Market Failures: Externalities When a market outcome affects parties other than the buyers and sellers in the market, side-effe