2008_02_14_Notes - UP FRONT, 2-14-08 For next time, the...

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UP FRONT, 2-14-08 For next time, the reading for this time will be sufficient: Perman et al. 165-181 (of which 165-177 is mostly background) Outline for Today 1) Effect of elasticities on magnitude of externalities 2) Efficient amounts of externality, using calculus 3) Property rights as a way of addressing to externalities, conclusion 4) A Pigovian tax as a way of addressing externalities 5) Example of a “second-best” emission fee: A tax on a polluting producer of a good
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Effect of elasticities on size of externalities
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Using calculus, efficient amount of consumption-consumption externality
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Using calculus, efficient amount of production- consumption externality
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[ Recap prior Coase material]
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Some lessons from Coase Government intervention may not be necessary. Often, initial assignment of externality property rights matters, so try to assign them to those who most need them. Government can support efficient privately negotiated outcomes through information, reduced transaction costs, courts, and clear property rights.
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This note was uploaded on 02/19/2009 for the course AEM 4510 taught by Professor Shawhan,d. during the Spring '08 term at Cornell University (Engineering School).

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2008_02_14_Notes - UP FRONT, 2-14-08 For next time, the...

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