Econ 102 notes 4-06-09

Econ 102 notes 4-06-09 - Industrial policy= Government...

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
Econ 102 Chapter 10 Week of 4/6/09 Externalities Externality= the uncompensated impact of one person’s actions on the well-being of a bystander Negative externality= when the impact is a negative one (i.e. the release of dioxin into the atmosphere) Positive externality= when the impact is a positive one Internalizing the externality= altering incentives so that people take account of the external effects of their actions Negative externalities lead markets to produce a larger quantity than is socially desirable. Positive externalities lead markets to produce a smaller quantity than is socially desirable. Government taxes goods with negative externalities and subsidizes goods that have positive externalities. Technology spillover (a positive externality)= The impact of one firm’s research and production efforts on other firms’ access to technological advance
Background image of page 1
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: Industrial policy= Government intervention in the economy that aims to promote technology-enhancing industries Property right= a.k.a. a patent on an idea Command-and-control policies= regulate behavior directly Market-based policies= provide incentives so that private decision makers will choose to solve the problem on their own. Corrective tax= a tax designed to induce private decision makers to take account of the social costs that arise from a negative externality Coase theorem= the proposition that if private parties can bargain without cost over the allocation of resources, they can solve the problem of externalities on their own Transaction costs= the costs that parties incur in the process of agreeing to and following through on a bargain Social cost= private cost + external cost...
View Full Document

This note was uploaded on 07/29/2009 for the course ECON 102 taught by Professor Clague during the Spring '08 term at San Diego State.

Ask a homework question - tutors are online