Summary pollution affects urban areas worldwide

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Summary
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Pollution affects urban areas worldwide, policies attack excessive pollution Pollution standard is a solution, imposs pollution limit at a socially optimal level Pigouvian Tax, polluter pays a tax per unit of pollution generated Non-Pigouvian Tax is simpler; tax liability = total MD Excessive pollution can be bargained to be eliminated b/t parties (Coase Theorem); no gov intervention req. Cap-And-Trade system to ensure target level of pollution w/lowest possible total abatement cost Chapter 10 Crime Model of Economic crime “Crime as occupational/choice” 1. Decision b/t legitimate income vs. criminal income 2. “Intensity” of criminal activity - criminals commit one crime per period City n=1...n(bar) Different skills,education, sociability (diff income as a result of these things) Index individuals Person 1: lowest legitimate income Person n(bar): highest legitimate income ‘Legitimate-income’ curve See figure 10.1 legitimate income curve n=k is the height of the legitimate-income curve, equals the legitimate income for individual k Criminal income the same for everyone, but different legitimate income bc diff skills L=loot a criminal can steal per period a=probability of apprehension, and L is lost (a depends on size of city’s police force) (1-a)L is the expected value of the criminal’s loot j=incarceration cost of spending time in jail See figure 10.2 occupational choice E = Criminals incur costs in commision of crime Net income from crime is equal to (1-a)L-aJ-e n=n c is the horizontal line that intersects the legitimate income curve Legitimate income above the horizontal criminal income line will choose to be legitimate workers Values below n c will be able to make more through criminal activity, choose to be criminals To the left of n c (on x-axis) and between 0 is the criminals, and to the right of it is legitimate workers up to n(bar) n(bar)-n c legitimate workers n c criminals or crime level of a city How a city’s characteristics affect crime See figure 10.3 the effect of a more disadvantaged population 1. City’s disadvantaged population becomes more disadvantaged a. skills/education levels in city’s disadvantaged population falls, becomes more “disadvantaged” b. Legitimate-income curve falls lower(lower height, n c moves to the right) c. n’ c >n c , so criminals/crime rise 2. Police force rises ( see figure 10.4 the effect of a larger police force) a. a increases (apprehension probability)
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b. Criminal income horizontal line shifts down c. n’’ c <n c , so less crime bc of more police d. More prisons = longer prison sentences because more capacity e. J rises, criminal income falls again (n c ) f. Stricter gun control makes n c decrease too g. Rising e makes n c fall 3. Loot stolen by criminals is from high-income residents see figure 10.5 the effect of greater wealth a. Legitimate income shifts up(no effect on anything) b. L increases, raises criminal-income line up to n’ c c. Greater city wealth equals greater n c 4.
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