Lec 7: Externality and costless climate change mitigation Flashcards
How does Broome distinguish individual and government action?
- individual action is what YOU can do on an individual scale
- government action is about improving efficiency
What does Broome mean by efficiency?
he is referring to Pareto efficiency. A system is in an efficient state if one person’s condition cannot be improved without worsening someone else’s.
What is an externality?
a side effect
What are the two ways of taking externalities into account?
1) by internalizing them (the Coase Theorem)
- the cost of pollution must be included in the cost of a product
2) by viewing externalities as public or common good
- climate is seen as a COMMON good
- mitigation of climate change is seen as a PUBLIC good
Explain the 5 steps of the Coase Theorem
1) Government assigns legal right to a clean environment
2) companies are forced to compensate those affected by pollution
3) they raise the price of their products to account for this compensation
4) the company’s competitiveness decreases
5) the company tries to reduce their pollution
What does emission trading require?
global management
What is the difference between a common good and a public good? Give an example of each.
both are non-excludable, but common goods are rivalrous whereas public goods are non-rivalrous.
Common good: natural resources
Public good: air
What is the tragedy of the commons?
when everyone attempts to free-ride, we all end up with less
What type of goods are the climate and climate change mitigation?
climate = common good mitigation = public good
What does the 2018 IPCC report say?
there is incentive to free-ride on others’ climate mitigation
What do Broome and Foley suggest?
That we should borrow from future generations to mitigate climate change
- they have a responsibility to us too
- both us and them will benefit from this
