ECON 1B03 Lecture Notes - Lecture 12: Coase Theorem, List Of Universities In Canada, Externality

• School: McMaster University
• Department: Economics
• Course: ECON 1B03
• Professor: Hannah Holmes

Document Summary

Education benefits not only those who go to school; all of society benefits by having an educated, more productive population. Value of education to everyone, marginal social benefit, msb, is > than just private benefit to those who receive education. Government can internalize externality by subsidizing production of good - get firms to supply more. In case of education, government does in fact subsidize canadian universities so that more programs and more facilities are available to accommodate even more students. Private sector can sometimes solve problems of externalities on its own. Moral codes and sanctions (like boycotting polluting companies) This is a proposition that if private parties can bargain without cost (or with very little cost) over allocation of resources, they can solve externalities problem on their own. Have to be well defined for bargaining to work resource is owned by government or by individuals. Owners have right to determine use of resource and right to services of resource.