【文章內(nèi)容簡介】 F Ff x p f c f x( 。 ) ( 。 )? ?Production Externalities m a x ( 。 ) ( 。 ).f F F Ff x p f c f x? ? ?The firstorder profitmaximization condition is Production Externalities m a x ( 。 ) ( 。 ).f F F Ff x p f c f x? ? ?The firstorder profitmaximization condition is p c f xfFF? ??( 。 ) .Production Externalities m a x ( 。 ) ( 。 ).f F F Ff x p f c f x? ? ?The firstorder profitmaximization condition is p c f xfFF? ??( 。 ) .Higher pollution raises the fishery’s marginal production cost and lowers both its output level and its profit. This is the external cost of the pollution. Production Externalities . suppose cF(f。x) = f2 + xf and pF = 10. The external cost inflicted on the fishery by the steel firm is xf. Since the fishery has no control over x it must take the steel firm’s choice of x as a given. The fishery’s profit function is thus ? F f x f f xf( 。 ) ? ? ?10 2Production Externalities Given x, the firstorder profitmaximization condition is ? F f x f f xf( 。 ) ? ? ?10 210 2? ?f x .Production Externalities Given x, the firstorder profitmaximization condition is So, given a pollution level x inflicted upon it, the fishery’s profitmaximizing output level is f x* .? ?5 2? F f x f f xf( 。 ) ? ? ?10 210 2? ?f x .Production Externalities Given x, the firstorder profitmaximization condition is So, given a pollution level x inflicted upon it, the fishery’s profitmaximizing output level is ? F f x f f xf( 。 ) ? ? ?10 2Notice that the fishery produces less, and earns less profit, as the steel firm’s pollution level increases. f x* .? ?5 210 2? ?f x .Production Externalities The steel firm, ignoring its external cost inflicted upon the fishery, chooses x* = 4, so the fishery’s profitmaximizing output level given the steel firm’s choice of pollution level is f* = 3, giving the fishery a maximum profit level of .9$343310*xf*f*f10)x*。f(22F??????????Notice that the external cost is $12. f x* .? ?5 2Production Externalities ?Are these choices by the two firms efficient? ?When the steel firm ignores the external costs of its choices, the sum of the two firm?s profits is $36 + $9 = $45. ?Is $45 the largest possible total profit that can be achieved? Merger and Internalization ?Suppose the two firms merge to bee one. What is the highest profit this new firm can achieve? Merger and Internalization ?Suppose the two firms merge to bee one. What is the highest profit this new firm can achieve? ?What choices of s, f and x maximize the new firm?s profit? ? m s f x s f s x f xf( , , ) ( ) .? ? ? ? ? ? ?12 10 42 2 2Merger and Internalization ? m s f x s f s x f xf( , , ) ( ) .? ? ? ? ? ? ?12 10 42 2 2The firstorder profitmaximization conditions are ?????????mmmssff xxx f? ? ?? ? ? ?? ? ? ? ?12 2 010 2 02 4 0.( ) .The solution is sfxmmm???642 .Merger and Internalization ?m m m mm m m m m m ms f xs f s x f x f( , , )( )( )$48 .? ? ? ? ? ? ?? ? ? ? ? ? ? ? ? ??12 10 412 6 10 4 6 2 4 4 2 42222 2 2And the merged firm’s maximum profit level is This exceeds $45, the sum of the non merged firms. Merger and Internalization ?Merger has improved efficiency. ?On its own, the steel firm produced x* = 4 units of pollution. ?Within the merged firm, pollution production is only xm = 2 units. ?So merger has caused both an improvement in efficiency and less pollution production. Why? Merger and Internalization ? s s x s s x( , ) ( )? ? ? ?12 42 2The steel firm’s profit function is so the marginal cost of producing x units of pollution is MC x xs ( ) ( )? ?2 4When it does not have to face the external costs of its pollution, the steel firm increases pollution until this marginal cost is zero。 hence x* = 4. Merger and Internalization In the merged firm the profit function is ? m s f x s f s x f xf( , , ) ( ) .? ? ? ? ? ? ?12 10 42 2 2The marginal cost of pollution is thus MC x fm x( ) ( )? ? ?2 4Merger and Internalization In the merged firm the profit function is ? m s f x s f s x f xf( , , ) ( ) .? ? ? ? ? ? ?12 10 42 2 2The marginal cost of pollution is MC x fm x( ) ( )? ? ?2 4? ? ?2 4( ) ( ).x MC xsMerger and Internalization In the merged firm the profit function is ? m s f x s f s x f xf( , , ) ( ) .? ? ? ? ? ? ?12 10 42 2 2The marginal cost of pollution is MC x fm x( ) ( )? ? ?2 4? ? ?2 4( ) ( ).x MC xsThe merged firm’s marginal pollution cost is larger because it faces the full cost of its own pollution through increased costs of production in the fishery, so less pollution is produced by the merged firm. Merger and Internalization ?Merger therefore internalizes an externality and induces economic efficiency. ?How else might internalization be caused so that efficiency can be achieved? ?方法二是收稅，見書上 500頁。 ?方法三是界定產(chǎn)權(quán)。 Coase and Production Externalities ?Coase argues that the externality exists because neither the steel firm nor the fishery owns the water being polluted. ?Suppose the property right to the water is created and assigned to one of the firms. Does this induce efficiency? Coase and Production Externalities ?Suppose the fishery owns the water. ?Then it can sell pollution rights, in a petitive market, at $px each. ?The fishery?s profit function bees ? F f xf x p f f xf p x( , ) .? ? ? ?2Coase and Production Externalities ?Suppose the fishery owns the water. ?Then it can sell pollution rights, in a petitive market, at $px each. ?The fishery?s profit function bees ?Given pf and px, how many fish and how many rights does the fishery wish to produce? (Notice that x is now a choice variable for the fishery.) ? F f xf x p f f xf p x( ,