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AEM 250 Lec 12 Pigou v Coase 9-20-10 sv

AEM 250 Lec 12 Pigou v Coase 9-20-10 sv - The Solution to...

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The Solution to Pollution? versus Pigou Coase 1. Marginal Net Benefits. 2 Th C Th 2. The Coase Theorem a. Popular interpretation b. What Coase really meant
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Marginal Cost = Marginal Benefit ( MC = MB =0.75, Q=75)) No Externality ( M ki #3 R ti l l thi k t th i ) 2.25 2.50 Mankiw #3: Rational people think at the margin) 1 50 1.75 2.00 per kL Marginal Cost Marginal Benefit 1.00 1.25 1.50 ce $AU p NES = A + B+ C + D + E + F + G + J + K 0 25 0.50 0.75 Pric 0.00 0.25 0 25 50 75 100 125 Milli kL Q t Million kL per Quarter (AKA Supply = Demand )
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