【正文】
vernment may attempt to solve the problem through . . . ? mandandcontrol policies. ? marketbased policies. 來自 中國最大的資料庫下載 CommandandControl Policies ?Usually take the form of regulations: ?Forbid certain behaviors. ?Require certain behaviors. ?Examples: ?Requirements that all students be immunized. ?Stipulations on pollution emission levels set by the Environmental Protection Agency (EPA). 來自 中國最大的資料庫下載 MarketBased Policies ?Government uses taxes and subsidies to align private incentives with social efficiency. ?Pigovian taxes are taxes enacted to correct the effects of a negative externality. 來自 中國最大的資料庫下載 Examples of Regulation versus Pigovian tax If the EPA decides it wants to reduce the amount of pollution ing from a specific plant. The EPA could… ? tell the firm to reduce its pollution by a specific amount (. regulation). ? levy a tax of a given amount for each unit of pollution the firm emits (. Pigovian tax). 來自 中國最大的資料庫下載 MarketBased Policies ?Tradable pollution permits allow the voluntary transfer of the right to pollute from one firm to another. ?A market for these permits will eventually develop. ?A firm that can reduce pollution at a low cost may prefer to sell its permit to a firm that can reduce pollution only at a high cost. 來自 中國最大的資料庫下載 The Equivalence of Pigovian Taxes and Pollution Permits... Quantity of Pollution 0 Price of Pollution P Q Demand for pollution rights Pigovian tax (a) Pigovian Tax 2. ...which, together with the demand curve, determines the quantity of pollution. 1. A Pigovian tax sets the price of pollution... Quantity of Pollution 0 Q Demand for pollution rights Supply of pollution permits (b) Pollution Permits Price of Pollution P 2. ...which, together with the demand curve, determines the price of pollution. 1. Pollution permits set the quantity of pollution... 來自 中國最大的資料庫下載 Summary ?When a transaction between a buyer and a seller directly affects a third party, the effect is called an externality. ?Negative externalities cause the socially optimal quantity in a market to be less than the equilibrium quantity. ?Positive externalities cause the socially optimal quantity in a marke