AEM 250 Lec 10 9-15-10 Pigou sv

AEM 250 Lec 10 9-15-10 Pigou sv - Externalities II: Pigous...

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Externalities II: Pigou’s Solution to Pollution Voluntary Programs Polluter Pays rinciple Only a tiny fraction of American companies that pollute have signed up for President Bush's voluntary program to reduce emissions of gasses that many scientists believe cause “For more than 20 years, the Principle global warming, a newspaper reports. … the Washington Post reports only 50 companies have signed up to be "Climate eaders " the name of the administrations “Polluter Pays Principle” has been the cornerstone of U.S. environmental policy. Not only as this principle made it Leaders , the name of the administrations program inviting businesses to pledge to reduce their emissions by 10 percent. Of those 50, only 14 have established goals has this principle made it possible to clean up hundreds of the worst toxic waste cites, it also caused private industry to better to reduce emissions of gasses like carbon dioxide that are suspected of raising world temperatures, leading to possible effects like ltered weather patterns disappearing manage its pollution and waste. Carol Browning ormer EPA altered weather patterns, disappearing habitats for key species and rising sea levels, the Post reports.” (www.cbsnews.com/stories/2004/01/01/tech/main591086.shtml) Former EPA Administrator (Source: NY Times, 3/1/2002)
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Mankiw #7: Governments can sometimes improve on market outcomes. D i S I t H l tA k T h Q t i In Doing So, It Helps to Ask Three Questions 1. To what extent does society want to rely on market processes, and to what extent do they want government intervention? 2. What is the desirable level of pollution or pollution batement? (social optimum) abatement? (social optimum) 3. What is the most efficient way to get to the pollution abatement objective? (i.e., How do we get from private “market” optimum to social optimum?)
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Options • Voluntary Approaches – Morganstern and Pizer • Command-and-Control Regulations • Bargaining (Coase) • Market-Based Approaches olluter ays taxes ( igou – Polluter-pays taxes (Pigou) – Abatement Subsidies (Pigou) – Pollution permit/credit trading • Education/Information ther? Other?
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AEM 250 Lec 10 9-15-10 Pigou sv - Externalities II: Pigous...

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