Week 15 ECON 202 Notes
Week 15 ECON 202 Notes Econ202
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This 1 page Class Notes was uploaded by Sydney Dingman on Monday May 2, 2016. The Class Notes belongs to Econ202 at Colorado State University taught by Professor Christopher Blake in Winter 2016. Since its upload, it has received 21 views. For similar materials see Principles of Microeconomics in Economcs at Colorado State University.
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Date Created: 05/02/16
ECON 202, Week 15 4/26/16, Module 36, Externalities Do Module 33 at home Private solutions exist o 1960 Coase Theorem: in the presence of externality the market can reach an efficient solution Legal Rights of the parties are clearly defined Cost of making a deal is sufficiently low Cost of making a deal: Transaction cost Ex. Mick and Christina o Mick likes rock music and Christina hates rock music o If Mick has the right to play, she can pay him not to. o If you cannot play without an OK from her, he can pay her to play his music Both of those are internalize the externality. Transaction cost: o Cost of communication o Cost of making a legally binding agreement o Cost of bargaining delays; it takes time and delay the activity 4/26/16, Module 37, Externalities and Public Policy Environmental standards o Rules to specifying actions to producers and consumers o Clean Air Act (1970) o Short Comings: Inflexible. Doesn’t allow reduction in pollution to be achieved at minimum costs Emission Tax Tradable Emission Permits
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