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Environmental Economics; Externalities

Environmental Economics; Externalities. Taylor Chapters 14-15. Externality = external effect. An uncompensated effect on others. Why negative externalities? Are externalities a market failure?. Why negative externalities?. Absence of enforced property rights.

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Environmental Economics; Externalities

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  1. Environmental Economics;Externalities Taylor Chapters 14-15

  2. Externality = external effect • An uncompensated effect on others. • Why negative externalities? • Are externalities a market failure?

  3. Why negative externalities? • Absence of enforced property rights. • Pure free market: invasion requires compensation; cost is internalized.

  4. Handling externalities • Nothing (cell phones) • Social disapproval (bad language) • Negotiation (loud music) • Merging (land by airport) • Torts - law suits (neighbor’s barking dogs) • Command and control, regulation (smog checks, smoking). • Pollution charges (cars).

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