Chapter 16 Externalities Flashcards
1
Q
negative externality
A
external cost
2
Q
positive externality
A
external benefit
3
Q
marginal damage cost
A
cost of damage caused by emitting an additional unit of pollution
4
Q
marginal abatement cost
A
cost of eliminating an additional unit of pollution
5
Q
coase theorem
A
in the presence of externalities an economy can always reach an efficient solution provided that the transaction costs of making a deal are sufficiently low
6
Q
optimal tax
A
where MAC and MDC meet
7
Q
3 types of government intervention
A
environmental standards, emissions tax (pigouvian tax), tradable emissions permits
8
Q
environmental standard
A
not cost effective
