ECN E102 Lecture Notes - Lecture 21: Coase Theorem, Tax Deduction, Opportunity Cost
Document Summary
Sometimes, the problem of externalities is solved with moral codes and social. Many charities are established to deal with externalities sanctions (e. g. why most people don"t litter) Greenpeace, whose goal is to protect the environment, is a non-profit organization funded with private donations. Colleges and universities receive gifts from alumni, corporations and foundations in part because education has positive externalities for society. Government encourages this by allow an income tax deduction for charitable donations. The private market can often solve the problem of externalities by relying on the. Sometimes, the solution takes the form of integrating types of businesses self-interest of the relevant parties (one buying/merging with the other) Interested parties can also enter a contract in order to set the right number of each product that each firm produces this solves the inefficiency that normally arises from these externalities and make both parties better off.
