Econ 101 Winter 2010 Lecture 19

Econ 101 Winter 2010 Lecture 19 - Economics 101...

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Click to edit Master subtitle style Lecture 1 Economics 101 Microeconomics University of Michigan Winter 2010 Lecture 19
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Lecture 1 22 Chapter 5 of text Available on CTools No quiz this week in discussion Reading Problem Set 10
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Lecture 1 Exam Monday Night: 8:00 pm – 10:00 pm Sec 1, 4, 7: EH 1360 q Sec 2, 3, 5, 6, & 8 thru 11: Lorch 140 q (GSIs: Sebastian Bradley, Bartek Woda, and Michael McWilliams) 33
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Lecture 1 Exam Material q Notes on CTools Elasticity q Chapter 6 Trade policy q Chapter 8 Externalities q Chapter 5 (first half) 44
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Lecture 1 Externalities Summary 1. Externalities imply a divergence between private and social costs/valuations of resources n Privately motivated trade may not attain efficient resource allocation 1. Private negotiations might internalize the externalities if: n property rights are assigned and enforced n bargaining and transactions costs are low 1. Pigouvian taxation/subsidization might internalize the externalities n Requires the regulator accurately to assess the value of the marginal externality
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Lecture 1 Joint Consumption Temptation to think externalities are always “side-effects” Some goods and services provide externalities because they are jointly consumed n We say there is no rivalry in consumption Examples: n If I pay to erect a lighthouse to keep my ship safe,
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This note was uploaded on 04/20/2010 for the course ECON 101 taught by Professor Gerson during the Winter '08 term at University of Michigan.

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Econ 101 Winter 2010 Lecture 19 - Economics 101...

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