Chapter 18-Externalities and Public Goods.pptVIP免费

Chapter18ExternalitiesandPublicGoodsExternalitiesandPublicGoodsChapter18Slide2TopicstobeDiscussedExternalitiesWaysofCorrectingMarketFailureExternalitiesandPropertyRightsCommonPropertyResourcesChapter18Slide3TopicstobeDiscussedPublicGoodsPrivatePreferencesforPublicGoodsChapter18Slide4ExternalitiesNegativeActionbyonepartyimposesacostonanotherpartyPositiveActionbyonepartybenefitsanotherpartyChapter18Slide5ExternalCostScenarioSteelplantdumpingwasteinariverTheentiresteelmarketeffluentcanbereducedbyloweringoutput(fixedproportionsproductionfunction)Chapter18Slide6ExternalCostScenarioMarginalExternalCost(MEC)isthecostimposedonfishermendownstreamforeachlevelofproduction.MarginalSocialCost(MSC)isMCplusMEC.MCS=MCIDP1AggregatesocialcostofnegativeexternalityP1q1Q1MSCMSCIWhentherearenegativeexternalities,themarginalsocialcostMSCishigherthanthemarginalcost.ExternalCostsFirmoutputPriceIndustryoutputPriceMECMECIThedifferencesisthemarginalexternalcostMEC.q*P*Q*TheindustrycompetitiveoutputisQ1whiletheefficientlevelisQ*.Theprofitmaximizingfirmproducesatq1whiletheefficientoutputlevelisq*.Chapter18Slide8ExternalCostNegativeExternalitiesencourageinefficientfirmstoremainintheindustryandcreateexcessiveproductioninthelongrun.Chapter18Slide9ExternalitiesPositiveExternalitiesandInefficiencyExternalitiescanalsoresultintoolittleproduction,ascanbeshowninanexampleofhomerepairandlandscaping.Chapter18Slide10MCP1ExternalBenefitsRepairLevelValueDIsresearchanddevelopmentdiscouragedbypositiveexternalities?q1MSBMEBWhentherearepositiveexternalities(thebenefitsofrepairstoneighbors),marginalsocialbenefitsMSBarehigherthanmarginalbenefitsD.q*P*Aself-interestedhomeownerinvestsq1inrepairs.Theefficientlevelofrepairsq*ishigher.ThehigherpriceP1discouragesrepair.Chapter18Slide11WaysofCorrectingMarketFailureAssumption:ThemarketfailureispollutionFixed-proportionproductiontechnologyMustreduceoutputtoreduceemissionsUseanoutputtaxtoreduceoutputInputsubstitutionpossibleb...