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Externality

Externalities

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Economics
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Environmental economics
Digital media
Externality
Market failure
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Day 7 Spillover or Externality: When the price paid for a good does not cover ALL the costs of use (e.g. gasoline) (they don?t go away, they exist and always are there and are paid for one way or another) Costs thus ?spill over? to 3rd parties who then must pay (negative) Are OVERPRODUCED Supply shifts to the left -> Taxes, Lawsuits, Fines, Regulations Economic activity that produced external benefits will tend to be under-produced. The demand curve which measures only private benefits, will not accurately reflect all benefits. The school subsidizes Aposhian to get the flu shot. List of every different kind of tax you pay in February: sales - 8.5%; regressive (burdens lower more than higher) corporation income - 34%; capital gains payroll

externalities

Subject: 
Economics
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0
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SocialTags: 
Economics
Market failure
Law and economics
Environmental economics
Externality
Ronald Coase
Coase theorem
Externalities- When an economic transaction happens there are spillovers some bad and some good Spillover Costs (pollution, crime, etc) Spillover Benefits some good ( better health, quicker transportation) What should government do to externalities, when should they get involved People controlled Coase theorem- If there are no large bargaining costs, people will do what is best for both them and “community”. Lawsuits – Nuisance suits are common but do they contain spillovers? Punitive damages sometimes do the trick, but companies will always weigh activity versus cost of big lawsuit, Big tobacco, McDonalds’ coffee etc… Government action
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