Unformatted text preview: Internalizing the externality- altering incentives for producers to take into account external effects Coase theorem- private parties can solve problems on their own Transition cost- cost (fees) to come to agreement/ bargain Corrective cost- set price, quantity follows Pollution permit- set quantity, price follows Chapter 11 Excludability- can you exclude people from using this good? Rivalry in consumption- if one persons uses the good doest it can another use the same good Private goods-yes excludable and yes rival Public goods-no rival and no excludable Common resources- goods rival consumption but not excludable Free rider- person who receives the benefit of a good but avoids paying for it Cost by benefit analysis- study that compares cost to benefit to society of providing a public good Tragedy of the commons- parable that illustrates why common resources get used more than is desirable from the standpoint of society as a whole...
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- Spring '08
- Consumer Surplus, producer, economic surplus, Economics terminology, Externality, effects economic wellbeing