ECON 2Q03 Lecture Notes - Lecture 4: Coase Theorem, Social Cost, Environment And Climate Change Canada
Document Summary
Relatively low cost, if environment is really bad, to improve it somewhat. If we eliminate pollution, the cost of eliminating the next unit of pollution is higher. If low environmental quality, the extra benefit decreases. Most air pollution derives from beneficial economic activity. Unrealistic to say that we want no air pollution. A problem because private cost differs from social cost (externality) Property rights - legally defined right to use property for specific purposes. Coase theorem - if property rights are established and enforced, markets can reach an efficient outcome. Coase theorem works regardless of who has the property rights (polluters have the right to pollute, or consumers have the right to a clean environment) Environmental protection agency regulates pollution in the us. Limits on air pollutants and emissions: mandates certain technology and fuels. Clean air act reduced emissions by the following amounts (in %) Benefits and costs of the clean air act.