econ100311 - The Problem Self-interested individuals...

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Microeconomics Oct. 3 rd , 2011 Can the market save Tuvalu? The Coase Theorem Three Points “Coase Theorem” suggests that with clearly specified property rights, individual bargaining will lead to efficient resolution of externalities without government regulation, without regard to the allocation of property rights. Coase recognizes that the allocation of property rights will determine distribution of income Individual bargaining will not be efficient because of collective action problems, bargaining, and a maldistribution of income.
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Unformatted text preview: The Problem: Self-interested individuals ignore 'third-party' effects It is cheaper to pollute. We all suffer. Pollution is causing global warming. Goodbye, Venice. Global temperatures are rising. And they will go up more. So long, New York. Farewell, polar bears. No more skiing. I hope we will still have puppies. .. And kittens. The issue of the age: Why don't we act on climate change? – We discount the future? – We discount the danger? – We want to free ride while someone else fixes things? – Victims 508.561.1472...
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This note was uploaded on 04/04/2012 for the course ECON 103 taught by Professor Voorheis during the Fall '08 term at UMass (Amherst).

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