Environmental Market Failures

Question 1

Depletability/Rivalry

Answer 1

Whether the use of a good affect the use of someone else’s

Question 2

Private goods

Answer 2

are single use, restricted to payers
- depletable
- excludable

Question 3

Toll goods

Answer 3

Joint use, restricted to payers
- not depletable
- excludable

Question 4

Common resources

Answer 4

Single use, unrestricted
- depletable
- not excludable

Question 5

Public goods

Answer 5

Joint use, unrestricted
- not depletable
- not excludable

Question 6

Tragedy of the Commons

Answer 6

Harding 1969 - When rational self interest != community welfare

Question 7

Global commons

Answer 7

depletable natural resources + vital ecosystem services that belong to all of humanity

Question 8

Commons

Answer 8

Refers to any depletable, non excludable resource

Question 9

Open access problem

Answer 9

The best interest of harvesters of commons is at odds with what is best for society in the long term

Question 10

Free rider problem

Answer 10

If one cannot be denied a resource, there is little incentive to contribute to it

Question 11

Externality

Answer 11

Cost/benefit of the production or consumption of a good experienced by people other than the producer/consumer

Question 12

Externality market failure

Answer 12

If no compensation paid –> full cost of good not represented by price

Question 13

Subsidy

Answer 13

A form of financial aid/support to increase public welfare (inverse of taxes)

Question 14

Perverse subsidy

Answer 14

A subsidy whose net effect reduces public welfare