Externalities Flashcards
1
Q
What is a negative externality?
A
When there is an external cost on a third party of the transaction
2
Q
What is a positive externality?
A
When there is an external benefit on a third party of the transaction
3
Q
What are some market based policies for externalities?
A
- Per unit taxes
- Per unit subsidies
4
Q
What is a Pigovian tax?
A
A tax that corrects the effects of a negative externality
5
Q
What are some anti alcohol government policies
A
- Retrictions on advertising or a negative advertising campaign
- A tax per unit of alcohol
- A minimum price per unit of alcohol
