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11 Cards in this Set
- Front
- Back
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external cost |
an uncompensated cost that an individual or firm imposes on others |
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external benefit |
a benefit that an individual or firm confers on others without receiving compensation |
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Coase theorem |
even in the presence of externalities, an economy can always reach an efficient solution as long as the transaction costs are low |
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internalize the externality |
taking external costs and benefits into account |
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environmental standards |
rules that protect the environment by specifying actions by producers and consumers |
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emissions tax |
a tax that depends on the amount of pollution a firm produces |
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Pigouvian taxes |
taxes designed to reduce external costs |
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tradable emission permits |
licenses to emit limited quantities of pollutants that can be bought and sold by polluters |
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Pigouvian subsidy |
a payment designed to encourage activities that yield benefits |
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technology spillover |
an external benefit that results when knowledge spreads among individuals and firms |
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positive feedback |
when the success of a good breeds greater success, same thing with failure |
