[经济学]Chapter_052012.pptVIP

CHAPTER 5 Externalities Externalities Externality – An activity on one entity that affects the welfare of another entity in a way that is outside the market mechanism Not an Externality – suburban-urban migration example Sections: The Nature of Externalities Graphical Analysis Private Responses Public Responses to Externalities: Taxes and Subsidies Public Responses to Externalities: Emissions Fees and Cap-and-Trade Programs Implications for Income Distribution The Nature of Externalities Privately-owned versus commonly-owned resources Externalities can be produced by consumers as well as firms Externalities are reciprocal in nature Externalities can be positive Public goods can be viewed as a special kind of externality The Nature of Externalities-Graphical Analysis What Pollutants Do Harm? Empirical Evidence: What is the Effect of Pollution on Health? What Activities Produce Pollutants? What is the Value of the Damage Done? Empirical Evidence: The Effect of Air Pollution on Housing Values *** N. Gregory Mankiw The Types of Private Solution: 1. moral codes and social sanction 2. charities----to protect environment 3. merges----an apple grower and a beekeeper 4. enter into a contract----a payment from one party to the other----Coase Theorem Private Solution does not always work Bargaining and the Coase Theorem The Coase Theorem Coase Theorem – Provided that transaction casts are negligible, an efficient solution to an externality problem is achieved as long as someone is assigned property rights, independent of who is assigned those rights Assumptions necessary for Coase Theorem to work The costs to the parties of bargaining are low The owners of resources can identify the source of damages to their property and legally prevent damages Other Private Solutions Mergers Social conventions Public Responses to Externalities – Taxes and Subsidies Taxes: Pigouvian tax is a tax levied on each unit of a polluter’s output in an amount just equal to the m