Thus, spam is a common resource. Like most common resources, spam is overused “Spam” email is named after everyone’s favorite delicacy. Get so much of them
PUBLIC GOODS AND COMMON RESOURCES 20 Economic View of Individual Liberty and Cap and Trade Recall Coase Theorem: If private parties can __costlessly___ bargain over the allocation of resources, they can solve the externalities problem on their own with a __lowest cost___. There are debates over solutions to global warming problem. Both _conservatives_ and _libertarians_ invoke Coase Theorem to support their arguments.
PUBLIC GOODS AND COMMON RESOURCES 21 Libertarian Support of Cap and Trade Libertarians: Government should impose taxation and cap and trade because, in Coase Theorem spirit, 1. global warming involves prohibitively large transaction costs, and theres no practical way to negotiate private solutions 2. cap and trade will result in lowest cost solutions, which would have been adopted by private parties if negotiations had been practical.
PUBLIC GOODS AND COMMON RESOURCES 22 Conservatives Oppose Cap and Trade Conservatives: in Coase Theorem spirit, 1. Government does not need to regulate activities that cause harm to others. Private parties can negotiate and reach most efficient outcome 2. Cap and trade is needless. It is just social engineering and an attack on indi. liberty
PUBLIC GOODS AND COMMON RESOURCES 23 Taxation and Cap and Trade Conclusion Regarding global warming: 1. Private markets fail to account for the costs of CO2 emissions. 2. Either taxation or cap and trade would move us closer to the efficient outcome – the outcome we would see if there were perfect info and no obstacles to free
PUBLIC GOODS AND COMMON RESOURCES 24 CONCLUSION Public goods tend to be under-provided, while common resources tend to be over consumed These problems arise because property rights are not well established Nobody owns the air, so no one can charge polluters. Result: too much pollution Nobody can charge people who benefit from national defense. Result: too little defense The govt can potentially solve these problems with appropriate policies.
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