Term
Externalities
[Environment] |
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Definition
| External costs and benefits together. Benefits that individuals or firms confer on others without receiving compensation |
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Term
Coase Theorem
[Environment] |
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Definition
| Even in the presence of externalities an economy can always reach an efficient solution provided that the costs of making a deal are sufficiently low. example: two neighbors' BBQ with oldies music |
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Term
Emissions Tax
[Environment] |
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Definition
| Charge polluters directly. Depends on the amount of pollution a firm produces. Government regulated. |
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Term
Tradeable Emissions Permits
[Environment] |
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Definition
Licesnes to emit limited quantities of pollutants that can be bought and sold by polluters. Can be traded between polluters.
-gives an incentive to take the marginal social cost into account
-incentive to use technology |
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Term
Marginal Social Cost of a Good or Activity
[Environment] |
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Definition
| Equal to the marginal cost of production plus its marginal external cost. |
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Term
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Definition
| Non-excludable and non-rival in consumption. Like a public sewer system. |
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Term
Common Resource
[Environment] |
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Definition
| Non-excludeable but rival in consumption, like clean water in a river. |
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Term
Free-Rider Problem
[Environment] |
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Definition
| Goods that are nonexcludable suffer from this; Individuals have no incentive to pay for their own consumption and instead will take a "free ride" on anyone who does pay. Ex. Group Study |
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Term
Cost-Benefit Analysis
[Environment] |
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Definition
When governments estimate the social costs and social benefits of providing a public good.
-estimating benefit = difficult |
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Term
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Definition
When individuals ignore the fact that their use depletes the amount of the resource remaining for others.
-in common resources left to the market. |
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