Chapter 17 - Externalities - the environment and natural resources

Chapter 17 - Externalities - the environment and natural resources

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Chapter 17 Externalities, the Environment, and Natural Resources Environmental taxes are perhaps the most powerful tool societies have for forging economies that protect human and environmental health. DAVID  MALIN  ROODMAN Since Fuel is become so expensive, and will of course grow scarcer and dearer; any new Proposal for saving the [fuel] . . . may at least be thought worth Consideration. BENJAMIN  FRANKLIN
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1. Economics of Environmental Protection 1911, Arthur C. Pigou The economics of welfare Environment problems Externalities Environmental policy Monetary pollution charges 2
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Externalities: Critical Shortcoming Beneficial / detrimental externality Incidental benefits / damages To others Not directly involved No corresponding compensation Provided to/paid by those who generate it 3
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Externalities Externalities Shortcoming of market Can be cured by market methods Creators of harmful externalities Do not pay for damages Little incentive to desist Market Overabundance of harmful externalities 4
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Externalities Creators of beneficial externalities Not compensated Little incentive to supply Market Undersupply of desirable externalities Externalities Affect health of population Threaten natural resource 5
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Highly publicized externality Pollution Better air quality, U.S. Declines in automobile pollution
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This note was uploaded on 09/23/2009 for the course ECO 108 taught by Professor Wolman during the Spring '08 term at SUNY Stony Brook.

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Chapter 17 - Externalities - the environment and natural resources

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