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Unformatted text preview: 1 Section Notes Week 8 Outline Key Concepts Correction of Weitzman Graph Renewable/Nonrenewable Resources Natural Resources Open Access Problem Set 2 Tragedy of the Commons Questions Steady State Weitzman For two reasons, I want to clarify the Weitzman graph. For one, I realize now its confusing to have seen it two different ways (the way I do it is different than the way it is in the lecture notes). Secondly, my graph was technically wrong in that I was graphing uncertainty in MSC. Heres the main point: If we dont know where the true demand is but its relatively price sensitive, we shouldnt use a price instrument because being off by a little results in large discrepencies; if its price insensitive a price instrument would be preferred. With perfect information, there is no difference between a tax and a standard in terms of efficiency; they can both achieve optimality with the only difference being welfare distribution (firms gain under standard, lose under a tax). But if theres uncertainty in demand and we(firms gain under standard, lose under a tax)....
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This note was uploaded on 09/24/2011 for the course ECON C125 taught by Professor Zelberman during the Spring '09 term at University of California, Berkeley.
- Spring '09