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Chaper 3: THEORY OF EXTERNALITIES, Polluter pays principle - Coggle Diagram
Chaper 3:
THEORY OF EXTERNALITIES
EXTERNALITIES
Definition + Equation
Equilibrium
2 types
NEGATIVE Ext (overproduction)
POSITIVE Ext (under-provision)
Implication: INTERNALIZATION
GLOBALISATION
Displacement Hypothesis
Environmental justice + International coordination
Implication: Polllution
MARKET EFFICIENCY
MARGINAL COST
MARGINAL BENEFIT
Invisible Hand
Conditions (3)
NEGATIVE Externalities
External Costs
SOCIAL MARGINAL COST
formula
Monetary Valuation of Damages
Q
< Qₘ, P
> Pₘ
PIGOVIAN TAX
Definition + Mechanism
Upstream Taxes
Tax Incidence
POSITIVE EXTERNALITIES
SOCIAL MARGINAL BENEFIT
formula
Qₘ < Q* → under-provision
SUBSIDIES
to
CONSUMERS
to
PRODUCERS
Fossil-fuel subsidies: explicit vs implicit
COASE THEOREM
Conditions
Limits
Free-Market Environmentalism
Polluter pays principle