141126W: this section summary reviewed and sequence reposted Summarized from Greg Mankiw’s Principles of Economics PART 4 The Economics of the Public Sector Chapter 10 of 36 – Externalities section 7 … Figure 2 here again Figure 3 here again Government can respond to market failure externalities in two ways • command-and-control government mandated policies to directly regulate behavior: regulations (covered previous section) • market-based policies that incentivize private decision makers to solve the problem: corrective taxes & subsidies, and tradable pollution permits … Market-based policies that incentivize private decision makers to solve the problem: corrective taxes & subsidies, and tradable pollution permits • corrective taxes and subsidies Government can internalize (take into account, to help achieve socially optimum equilibrium) externalities by • taxing activities that have negative externalities • subsidizing activities that have positive externalities Taxes addressing the effects of negative externalities are called “corrective taxes.” An ideal corrective tax equals the external cost from an activity with negative externalities, per figure 2. Economists usually prefer corrective taxes over regulations because they can reduce pollution at a lower economy/society cost. An ideal corrective subsidy equals the external benefit from an activity with positive externalities, per figure 3. … government response to market failure externalities 市場 失敗 外部性 の 政府 に 解答 いちば しっぱい がいぶせい の せいふ に かいとう ichiba shippai gaibusei no seifu ni kaitō 外部性 … がいぶせい … externality
Posted on: Wed, 26 Nov 2014 11:20:23 +0000
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