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Unformatted text preview: that a negative (positive) externality imposes on others ie damage from pollution resulting from production of one unit of good Marginal Social cost: MPC + MEC Responeses to Externalities Assignment of property rights and bargaining Mergers Taxes and subsidies Quotas Standards Market formation: cap and trade Voluntary agreements Education (changing preferences) Though any of these policies can achieve socially optimal privisions they have a significant consequences for distrivution of economic benefits Principles of targeting: poicy should target the externality-producing activity- production or consumption 15:20 15:20...
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This note was uploaded on 02/23/2012 for the course 373 363 taught by Professor Hochman during the Spring '12 term at Rutgers.
- Spring '12