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BLOCK 5.2, Welfare is subjective, is it necessarily desirable, though? >…

- - - - where two parties are connected by an externality, a Pareto efficient outcome can be reached through private negotiation
      - Limitations
        
        Distribution between those negotiating
        
        Bargaining power
        
        Transaction costs
  - - - Problems
        
        Distinction between social- and private costs
        
        Distributional consequences (lower class?)
        
        Objection to such taxes
    - - Pollution permits
  - - - Cannot exclude others from consuming
    - - One consuming does not mean that another cannot consume it
- - - - Dominant strategy
        
        Best strategy regardless of what the other does
  - - - A combination of strategies from which no player has an incentive to deviate
    - - Rewards and punishment
        
        Subsidies
        
        Fines
        
        Limitation
        
        Government spending
        
        Monitoring
        
        Meting out rewards/punishment
        
        Detecting
        
        Subsidies
      - Collective action
      - Changing beliefs and norms
      - A credible leader
- - - - Since GOV organisations do not have to earn profit, GOV administrators may maximise size of their budgets
- - - - Veil of ignorance
  - - - Tax impedes freedom and forces labour on behalf of the general collective