1• Title:Mercy Mercy Me (The Ecology)• Artist:Marvin Gaye•Economic concept:negative externalities in production (pollution)•Representative lyrics:Where did all the blue sky go? Poison is the wind that blows…Oil wasted on the oceans and upon our seas; fish full of mercury…Radiation in the ground and in the sky, animals and birds who live nearby are dying…Oh, mercy mercy me. Oh, things ain't what they used to bePAM 200: Intermediate MicroeconomicsProf. John CawleyChapter 18:Externalities, Commons, and Public Goods
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2Where We AreConsumer Theory Individual Demand Market DemandTheory of Production Costs of Production Perfect Competition Imperfect Competition:MonopolyMonopolistic CompetitionOligopolyPricesGeneral EquilibriumMarket ImperfectionsFactor MarketsStrategy Game TheoryOutline• Externalities•Inefficiency of Competition With Externalities•Internalizing Externalities•Allocating Property Rights to Reduce Externalities•Common Property•Public Goods