【正文】 yB p(sB) p(sA) sA = sB For both agents, the MRS is constant as money changes, for given smoke intensity. Externalities and Property Rights OA 1 0 Smoke OB 1 0 Smoke yA yB p(sB) p(sA) sA = sB So, for both agents, preferences must be quasilinear in money。 Negative Externalities OA 1 0 Smoke mA OB 1 0 Smoke mB yA yB Efficient allocations B’s most preferred choice Inefficiency amp。 Negative Externalities ?Continue to suppose there is no means by which money can be exchanged for changes in smoke level. ?What is Agent B?s most preferred allocation? ?Is this allocation efficient? Inefficiency amp。 Negative Externalities OA 1 0 Smoke mA OB 1 0 Smoke mB yA yB Efficient allocations A’s choices Inefficiency amp。 Negative Externalities ?Suppose there is no means by which money can be exchanged for changes in smoke level. ?What then is Agent A?s most preferred allocation? ?Is this allocation efficient? Inefficiency amp。 Negative Externalities OA 1 0 Smoke mA OB 1 0 Smoke mB yA yB Inefficiency amp。 Negative Externalities OA 1 0 Smoke mA OB 1 0 Smoke mB yA yB Inefficiency amp。 Negative Externalities OB 1 0 Smoke mB yB Money is a good and smoke is a bad for Agent B. Inefficiency amp。 Negative Externalities OA 1 0 Smoke mA yA Money and smoke are both goods for Agent A. Inefficiency amp。 Negative Externalities ?Agent A is endowed with $yA. ?Agent B is endowed with $yB. ?Smoke intensity is measured on a scale from 0 (no smoke) to 1 (maximum concentration). Inefficiency amp。 typically ? too much scarce resource is allocated to an activity which causes a negative externality ? too little resource is allocated to an activity which causes a positive externality. Inefficiency amp。第七章 市場(chǎng)失靈 ?市場(chǎng)失靈的四種情形 : ?壟斷 ?外部性（外部效應(yīng)） ?公共物品 ?不對(duì)稱信息 167。 外部性 Externalities ?An externality is a cost or a benefit imposed upon someone by actions taken by others. The cost or benefit is thus generated externally to that somebody. ?An externally imposed benefit is a positive externality（正外部性） . ?An externally imposed cost is a negative externality（負(fù)外部性） . Examples of Negative Externalities ?Air pollution. ?Water pollution. ?Loud parties next door. ?Traffic congestion. ?Secondhand cigarette smoke. ?Increased insurance premiums due to alcohol or tobacco consumption. Examples of Positive Externalities ?A wellmaintained property next door that raises the market value of your property. ?A pleasant cologne （科隆香水） or scent worn by the person seated next to you. ?Improved driving habits that reduce accident risks. ?A scientific advance. Externalities and Efficiency ?Externalities cause Pareto inefficiency。 Negative Externalities ?Consider two agents, A and B, and two modities, money and smoke. ?Both smoke and money are goods for Agent A. ?Money is a good and smoke is a bad for Agent B. ?Smoke is a purely public modity. Inefficiency amp。 Negative Externalities OA 1 0 Smoke mA yA Money and smoke are both goods for Agent A. Inefficiency amp。 Negative Externalities OB 1 0 Smoke mB yB Money is a good and smoke is a bad for Agent B. Inefficiency amp。 Negative Externalities ?What are the efficient allocations of smoke and money? Inefficiency amp。 Negative Externalities OA 1 0 Smoke mA OB 1 0 Smoke mB yA yB Inefficiency amp。 Negative Externalities OA 1 0 Smoke mA OB 1 0 Smoke mB yA yB Efficient allocations Inefficiency amp。 Negative Externalities OA 1 0 Smoke mA OB 1 0 Smoke mB yA yB Efficient allocations Inefficiency amp。 Negative Externalities OA 1 0 Smoke mA OB 1 0 Smoke mB yA yB Efficient allocations A’s most preferred choice is inefficient Inefficiency amp。 Negative Externalities OA 1 0 Smoke mA OB 1 0 Smoke mB yA yB Efficient allocations B’s choices Inefficiency amp。 Negative Externalities OA 1 0 Smoke mA OB 1 0 Smoke mB yA yB Efficient allocations B’s most preferred choice is inefficient Inefficiency amp。 U(m,s) = m + f(s). Coase’s Theorem ?Coase?s Theorem is: If all agents? preferences are quasilinear in money, then the same efficient level of the externality generating modity is produced no matter which agent is assigned the property right. Production Externalities ?A steel mill produces jointly steel and pollution. ?The pollution adversely affects a nearby fishery. ?Both firms are pricetakers. ?pS is the market price of steel. ?pF is the market price of fish. Production Externalities ?cS(s,x) is the steel firm?s cost of producing s units of steel jointly with x units of pollution. ?If the steel firm does not face any of the external costs of its pollution production then its profit function is and the firm?s problem is to ? s s ss x p s c s x( , ) ( , )? ?Production Externalities m a x ( , ) ( , ).,s x s s ss x p s c s x? ? ?The firstorder profitmaximization conditions are Production Externalities m a x ( , ) ( , ).,s x s s ss x p s c s x? ? ?The firstorder profitmaximization conditions are p c s xss s? ? ?( , )0 ? ? ?c s xxs ( , ) .and Production Externalities p c s xss s? ? ?( , )states that the steel firm should produce the output level of steel for which price = marginal production cost. Production Externalities p c s xss s? ? ?( , )states that the steel firm should produce the output level of steel for which price = marginal production cost. ??c s xxs ( , ) is the rate at which the firm’s internal production cost goes down as the pollution level rises Production Externali