cmserver-14 - Econ 1110 Introduction to Microeconomics...

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Econ 1110 Introduction to Microeconomics Professor Richard V. Burkhauser Externalities (Cont.)
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Prelim 1 Thursday October 6 th Regular Time Test: 7:30-9:30pm Seung, Jun and Sections: Ives 305 Dennis’s Section: Ives 105 Adrian and Jooyeon’s Sections: Morrison 145 Early Time Test: 5:15-7:15pm Ives 105 (not SDS) Must have approval from Sean Must stay the entire 2 hours If you handed in an SDS form: 5:15pm Rockefeller 102 There are varying times that you all will end, but you will have the time allotted to you as prescribed in your SDS form. Econ 1110 – Professor Burkhauser
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Two Prelim 1 Review Sessions • Session 1 – Monday, October 3 rd 7:30-9:00pm in the Statler Auditorium • Session 2 – Tuesday, October 4 th 5:00-6:30pm in the Statler Auditorium These Sessions replace class on Wednesday October 5 th Econ 1110 – Professor Burkhauser
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$0 $600 $1,000 $1,500 $2,000 $2,500 $3,000 $3,500 $4,000 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 Figure 10.5 How to Achieve the Optimal Amount of Pollution Set the supply of pollution permits at the optimal level. MC to society of pollution Or, set the pollution fee at the optimal level MB to firm of polluting
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Econ 1110 – Professor Burkhauser Market for Pollution: Optimal Allocation of Pollution across Firms • Cost schedule for eliminating sulfur dioxide emissions: 4 2 2 1 Optimal amount of pollution: $4,000 $900 $700 $600 Fourth unit $2,000 $700 $600 $300 Third unit $1,000 $550 $400 $200 Second unit $800 $500 $200 $100 First unit D C B A Firms Per Unit Cost of Eliminating
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Econ 1110 – Professor Burkhauser Question How should the government assign propert rights to arrive at the efficient allocation?
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Econ 1110 – Professor Burkhauser • The Coase Theorem is a proposition that if private parties can bargain without cost over the allocation of resources, they can solve the problem of externalities on their own. • Transactions Costs
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This note was uploaded on 10/21/2011 for the course ECON 1110 at Cornell University (Engineering School).

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cmserver-14 - Econ 1110 Introduction to Microeconomics...

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