经济学原理Chapter.ppt

N.G R E G O R Y M A N K I WPremium PowerPoint Slides by Ron Cronovich2008 update 2008 South-Western,a part of Cengage Learning,all rights reservedExternalities10P R I N C I P L E S O FF O U R T H E D I T I O N1可编辑In this chapter,look for the answers to these questions:What is an externality?Why do externalities make market outcomes inefficient?How can people sometimes solve the problem of externalities on their own?Why do such private solutions not always work?What public policies aim to solve the problem of externalities?2可编辑IntroductionRecall one of the Ten Principles from Chap.1:Markets are usually a good way to organize economic activity.Lesson from Chapter 7:In the absence of market failures,the competitive market outcome is efficient,maximizes total surplus.3可编辑IntroductionOne type of market failure:externalities.Externality:the uncompensated impact of one persons actions on the well-being of a bystander Negative externality:the effect on bystanders is adversePositive externality:the effect on bystanders is beneficial 4可编辑IntroductionSelf-interested buyers and sellers neglect the external effects of their actions,so the market outcome is not efficient.Another principle from Chapter 1:Governments can sometimes improve market outcomes.5可编辑Pollution:A Negative ExternalityExample of negative externality:Air pollution from a factory.The firm does not bear the full cost of its production,and so will produce more than the socially efficient quantity.How govt may improve the market outcome:Impose a tax on the firm equal to the external cost of the pollution it generates6可编辑Other Examples of Negative Externalitiesthe neighbors barking doglate-night stereo blasting from the dorm room next to yoursnoise pollution from construction projectstalking on cell phone while driving makes the roads less safe for othershealth risk to others from second-hand smoke7可编辑Positive Externalities from EducationA more educated population benefits society:lower crime rates:educated people have more opportunities,are less likely to rob and stealbetter government:educated people make better-informed votersPeople do not consider these external benefits when deciding how much education to“purchase”Result:market eqm quantity of education too lowHow govt may improve the market outcome:subsidize cost of education8可编辑Other Examples of Positive ExternalitiesBeing vaccinated against contagious diseases protects not only you,but people who visit the salad bar or produce sectionafter you.R&D creates knowledge others can use.Renovating your house increases neighboring property values.Thank you for not contaminating the fruit supply!9可编辑0123450102030Q(gallons)P$The market for gasolineRecap of Welfare EconomicsDemand curve shows private value,the value to buyers(the prices they are willing to pay)Supply curve shows private cost,the costs directly incurred by sellersThe market eqm maximizes consumer+producer surplus.$2.502510可编辑0123450102030Q(gallons)P$The market for gasolineAnalysis of a Negative ExternalitySupply(private cost)External cost=value of the negative impact on bystanders=$1 per gallon(value of harm from smog,greenhouse gases)Social cost=private+external costexternal cost 11可编辑0123450102030Q(gallons)P$The market for gasolineAnalysis of a Negative ExternalityDSSocial costThe socially optimal quantity is 20 gallons.At any Q 20,social cost of the last gallon isgreater than its value2512可编辑0123450102030Q(gallons)P$The market for gasolineAnalysis of a Negative ExternalityDSSocial costMarket eqm (Q=25)is greater than social optimum (Q=20)25One solution:tax sellers$1/gallon,would shift supply curve up$1.13可编辑“Internalizing the Externality”Internalizing the externality:altering incentives so that people take account of the external effects of their actionsIn our example,the$1/gallon tax on sellers makes sellers costs=social costs.When market participants must pay social costs,market eqm=social optimum.(Imposing the tax on buyers would achieve the same outcome;market Q would equal optimal Q.)14可编辑Positive ExternalitiesIn the presence of a positive externality,the social value of a good includesprivate value the direct value to buyersexternal benefit the value of the positive impact on bystandersThe socially optimal Q maximizes welfare:At any lower Q,the social value of additional units exceeds their cost.At any higher Q,the cost of the last unit exceeds its social value.A A C C T T I I V V E LE L E E A A R R N N I I N N G G 1:Analysis of a positive externality15The market for flu shotsDS010203040500102030PQ$External benefit=$10/shotDraw the social value curve.Find the socially optimal Q.What policy would internalize this externality?CHAPTER 10 EXTERNALITIESA A C C T T I I V V E LE L E E A A R R N N I I N N G G 1:AnswersSocially optimal Q =25 shotsTo internalize the externality,use subsidy=$10/shot.16The market for flu shotsDSSocial value=private value+external benefit010203040500102030PQ$external benefit25CHAPTER 10 EXTERNALITIES17可编辑 If negative externalitymarket quantity larger than socially desirableIf positive externalitymarket quantity smaller than socially desirableTo remedy the problem,“internalize the externality”tax goods with negative externalitiessubsidize goods with positive externalitiesEffects of Externalities:Summary18可编辑Private Solutions to ExternalitiesTypes of private solutions:moral codes and social sanctions,e.g.,the“Golden Rule”charities,e.g.,the Sierra Clubcontracts between market participants and the affected bystandersE.g.a beekeeper and apple orchard manager each agree to boost production,as each producers activity confers an external benefit on the other.19可编辑Private Solutions to ExternalitiesThe Coase theorem:If private parties can costlessly bargain over the allocation of resources,they can solve the externalities problem on their own.20可编辑The Coase Theorem:An ExampleDick owns a dog named Spot.Negative externality:Spots barking disturbs Jane,Dicks neighbor.The socially efficient outcome maximizes Dicks+Janes well-being.If Dick values having Spot more than Jane values peace&quiet,the dog should stay.Coase theorem:The private market will reach the efficient outcome on its own See Spot bark.21可编辑The Coase Theorem:An ExampleCASE 1:Dick has the right to keep Spot.Benefit to Dick of having Spot=$500Cost to Jane of Spots barking=$800Socially efficient outcome:Spot goes bye-bye.Private outcome:Jane pays Dick$600 to get rid of Spot,both Jane and Dick are better off.Private outcome=efficient outcome.22可编辑The Coase Theorem:An ExampleCASE 2:Dick has the right to keep Spot.Benefit to Dick of having Spot=$1000Cost to Jane of Spots barking=$800Socially efficient outcome:See Spot stay.Private outcome:Jane not willing to pay more than$800,Dick not willing to accept less than$1000,so Spot stays.Private outcome=efficient outcome.23可编辑The Coase Theorem:An ExampleCASE 3:Jane has the legal right to peace&quiet.Benefit to Dick of having Spot=$800Cost to Jane of Spots barking=$500Socially efficient outcome:Dick keeps Spot.Private outcome:Dick pays Jane$600 to put up with Spots barking.Private outcome=efficient outcome.The private market achieves the efficient outcome The private market achieves the efficient outcome regardless of the initial distribution of rights.regardless of the initial distribution of rights.242024/4/22 周一24A A C C T T I I V V E LE L E E A A R R N N I I N N G G 2:BrainstormingCollectively,the 1000 residents of Green Valley value swimming in Blue Lake at$100,000.A nearby factory pollutes the lake water,and would have to pay$50,000 for non-polluting equipment.A.Describe a Coase-like private solution.B.Can you think of any reasons why this solution might not work in the real world?25CHAPTER 14 THE MARKET FORCES OF SUPPLY AND DEMAND26可编辑Why Private Solutions Do Not Always Work1.Transaction costs:The costs parties incur in the process of agreeing to and following through on a bargain.These costs may make it impossible to reach a mutually beneficial agreement.2.Stubbornness:Even if a beneficial agreement is possible,each party may hold out for a better deal.3.Coordination problems:If#of parties is very large,coordinating them may be costly,difficult,or impossible.271.Transactions costs:Suppose lawyers charge$60,000 to represent the two parties and draw up a contract that is enforceable in a court.Then it will be impossible for both parties to come to a mutually beneficial agreement,and the factory will continue polluting the lake.2.Stubbornness:Suppose the town offers$55,000 to the factory.The factory would be better off taking this offer than nothing at all,but the factory may counter with a$95,000 price.Both parties hold out in hopes that the other will cede,but neither does.The factory keeps polluting,and the residents of Green Valley continue to be denied the joy of swimming in the lake.3.Coordination problems:Getting all 1000 residents to agree to a specific offer will be difficult.Moreover,each resident has an incentive to free-ride off his neighbors.CHAPTER 10 EXTERNALITIES28可编辑Public Policies Toward ExternalitiesTwo approachesCommand-and-control policies regulate behavior directly.Examples:limits on quantity of pollution emittedrequirements that firms adopt a particular technology to reduce emissionsMarket-based policies provide incentives so that private decision-makers will choose to solve the problem on their own.29可编辑Market-Based Policy#1:Corrective Taxes&SubsidiesCorrective tax:a tax designed to induce private decision-makers to take account of the social costs that arise from a negative externalityAlso called Pigouvian taxes after Arthur Pigou(1877-1959).The ideal corrective tax=external costFor activities with positive externalities,ideal corrective subsidy=external benefit30可编辑Market-Based Policy#1:Corrective Taxes&SubsidiesExample:Acme,US Electric run coal-burning power plants.Each emits 40 tons of sulfur dioxide per month.SO2 causes acid rain&other health issues.Policy goal:reducing SO2 emissions 25%Policy optionsregulation:require each plant to cut emissions by 25%corrective tax:Make each plant pay a tax on each ton of SO2 emissions.Set tax at level that achieves goal.31可编辑Market-Based Policy#1:Corrective Taxes&SubsidiesSuppose cost of reducing emissions islower for Acme than for US Electric.Socially efficient outcome:Acme reduces emissions more than US Electric.The corrective tax is a price on the right to pollute.Like other prices,the tax allocates this“good”to the firms who value it most highly(US Electric).32可编辑Market-Based Policy#1:Corrective Taxes&SubsidiesUnder regulation,firms have no incentive to reduce emissions beyond the 25%target.A tax on emissions gives firms incentive to continue reducing emissions as long as the cost of doing so is less than the tax.If a cleaner technology becomes available,the tax gives firms an incentive to adopt it.33可编辑Market-Based Policy#1:Corrective Taxes&SubsidiesOther taxes distort incentives and move economy away from the social optimum.But corrective taxes enhance efficiency by aligning private with social incentives.34可编辑Example of a Corrective Tax:The Gas TaxThe gas tax targets three negative externalities:congestionthe more you drive,the more you contribute to congestionaccidentslarger vehicles cause more damage in an accidentpollutionburning fossil fuels produces greenhouse gasesA A C C T T I I V V E LE L E E A A R R N N I I N N G G 3:Discussion questionPolicy goal:Reducing gasoline consumptionTwo approaches:A.Enact regulations requiring automakers to produce more fuel-efficient vehiclesB.Significantly raise the gas tax35Discuss the merits of each approach.Which do you think would achieve the goal at lower cost?Who do you think would support or oppose each approach?CHAPTER 10 EXTERNALITIES361.If consumers demand gas-guzzling SUVs instead of fuel-efficient compact sedans,then forcing automakers to produce more of the latter will not be the best way to achieve the goal.2.Raising the gas tax would shift consumer demand toward more fuel-efficient vehicles,and self-interested automakers would respond by producing more fuel-efficient vehicles.3.The U.S.cannot impose mileage restrictions on foreign automakers.It can,however,restrict imports of foreign vehicles deemed inefficient.But this would risk WTO sanctions or retaliatory trade restrictions on goods produced in the U.S.4.People who drive more than average are likely to prefer A to B.It might not be cost-effective for average Joes to organize,we could likely expect the trucking industry to lobby members of Congress to support option A and oppose option B.5.Many environmentalists would likely support B,but would likely oppose the end of regulations on automakers.CHAPTER 10 EXTERNALITIES37可编辑Market-Based Policy#2:Tradable Pollution PermitsRecall:Acme,US Electric each emit 40 tons SO2,total of 80 tons.Goal:reduce emissions 25%(to 60 tons/month)Suppose cost of reducing emissions is$100/ton for Acme,$200/ton for US Electric.If regulation requires each firm to reduce 10 tons,cost to Acme:(10 tons)x($100/ton)=$1,000 cost to USE:(10 tons)x($200/ton)=$2,000 total cost of achieving goal=$3,00038可编辑Market-Based Policy#2:Tradable Pollution PermitsAlternative:issue 60 permits,each allows its bearer one ton of SO2 emissions(so total emissions=60 tons)give 30 permits to each firm establish market for trading permitsEach firm can choose among these options:emit 30 tons of SO2,using all its permitsemit 30 tons 39可编辑Market-Based Policy#2:Tradable Pollution PermitsSuppose market price of permit=$150 One possible equilibrium:Acme spends$2,000 to cut emissions by 20 tonshas 10 unused permits,sells them for$1,500net cost to Acme:$500 US Electricemissions remain at 40 tonsbuys 10 permits from Acme for$1,500net cost to USE:$1,500Total cost of achieving goal:$2,000 40可编辑Market-Based Policy#2:Tradable Pollution PermitsA system of tradable pollution permits achieves goal at lower cost than regulation.Firms with low cost of reducing pollution sell whatever permits they can.Firms with high cost of reducing pollution buy permits.Result:Pollution reduction is concentrated among those firms with lowest costs.41可编辑Tradable Pollution Permits in the Real WorldSO2 permits traded in the U.S.since 1995.Nitrogen oxide permits traded in the northeastern U.S.since 1999.Carbon emissions permits traded in Europe since January 1,2005.42可编辑Corrective Taxes vs.Tradable Pollution PermitsLike most demand curves,firms demand for the ability to pollute is a downward-sloping function of the“price”of polluting.A corrective tax raises this price and thus reduces the quantity of pollution firms demand.A tradable permits system restricts the supply of pollution rights,has the same effect as the tax.When policymakers do not know the position of this demand curve,the permits system achieves pollution reduction targets more precisely.43可编辑Objections to the Economic Analysis of PollutionSome politicians,many environmentalists argue that no one should be able to“buy”the right