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4006449
Negative externality of production by Harry, Edward and Rain
Descripción
Solutions to negative externality of production
Sin etiquetas
externality
production
market failure
Mapa Mental por
tringuyenngocmin
, actualizado hace más de 1 año
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Creado por
tringuyenngocmin
hace alrededor de 9 años
43
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Resumen del Recurso
Negative externality of production by Harry, Edward and Rain
Remedies
Supply
Market-based solution
Imposing taxes (ie IBM laptops releasing pollutants into the air)
PROS
Reducing the amount of well fare loss, increasing revenue for government to use it in public goods
CONS
Difficult to measure the pollution created accurately and to put a value on it
Difficult to identify which firms are polluting and to what extent each firm is responsible for the pollution.
Taxes do not stop the actual pollution
Tradeable pollution permits (Cap and Trade system)
Licences to pollute a specific amount that the government allocates to polluting firms that are tradable in the open market.
PROS
The limit of pollution is set
Incentive to create more green and efficient firms
Loss of output is smaller than if the government splits the total level of pollution up into same amount for all firms.
CONS
not reduce pollution
difficulty in determining the initial allocation of permits
Command-and-control solutions
Ban or restrict output of the poducts
Cons
Unemployment
Non-consumption of valuable products
Pros
Reduce pollution
Demand
Advertising, or moral suasion, education
Market failure
Problems?
Lower price, more quantity
Over-consumption and over-supply
Inefficient allocation of resources
Effect?
Threats to Sustainability
Welfare Loss
Recursos multimedia adjuntos
324cb96a-d508-4835-87ad-a88ca3f67ab3 (image/jpg)
1242d567-060c-4350-93f8-c20904825061 (image/png)
b926db70-3ffb-44cf-9352-62248330d083 (image/jpg)
bb0b339b-3800-4ada-8851-e0426e3e0f69.JPG (image/JPG)
a245c8dd-ce47-4935-9e2d-9961d75d1ebc.JPG (image/JPG)
1370decc-97cf-4777-a08c-e0cd45106d8d.JPG (image/JPG)
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