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7 Cards in this Set
- Front
- Back
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World Price
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the price of a good that prevails in the world market for that good
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Tariff
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a tax on goods produced abroad and sold domestically
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Externality
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the uncompensated impact of one's person's actions on the well-being of a bystander
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Internalizing the Externality
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altering incentives so that people take account of the external effects of their actions
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Corrective Tax
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a tax designed to induce private decision makers to take account of the social costs that arise from a negative externality
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Coase Theorem
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the proposition that if private parties can bargain without cost over the allocation of resources, they can solve the problem of externalities on their own.
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Transaction Costs
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the costs that parties incur in the process of agreeing to and following through on a bargain
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