75: Externalities and Public Policy Flashcards

1
Q

environmental standards

A

rules that protect the environment by specifying limits or actions for producers and consumers

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2
Q

emissions tax

A

taxes that depend on the amount of pollution a firm produces, thus allocating most of the reduction to the firms with the lowest cost of reduction

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3
Q

pigouvian taxes

A

taxes designed to reduce external costs

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4
Q

tradable emissions permits

A

licenses to emit limited quantities of pollutants that can be bought and sold by polluters
–> those who can easily reduce emissions will sell some of their permits to those who find it more difficult

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5
Q

cap and trade programs

A

creates a market for the right to produce

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6
Q

marginal external benefit

A

difference between MBconsumer and MBsociety

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7
Q

pigouvian subsidy

A

payment designed to encourage activities that yield external benefits

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8
Q

technology spillover

A

external benefit that results when knowledge spreads among individuals and firms

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9
Q

marginal external cost

A

difference between MSC and MPC

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10
Q

network externality

A

when the value of a good to an individual is greater when other people use it

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11
Q

congestion

A

negative network externality

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