ECON 160 Lecture Notes - Lecture 20: Externality
17 Nov 2016
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If they need to pollute in order to produce goods. Pollution goes in the air yet everyone owns the air so no one has legal/property right of air. No because when introduced carbon tax brings market to an efficient solution. Because externality is produced, pollution comes from production and no one owns the air, so it can"t stop. Cap & trade system: cap is government putting mark on amount of pollution allowed to be permitted. Because they have to invest a lot of time, command and control are very costly in resources, information, and time. Will reducing carbon emissions entail real resource cost: yes b. If carbon tax was successful, natural disasters decrease. Firm a is willing to cost the firm for every ton of carbon emitted. Firm b is willing to cost the firm per ton of carbon emitted.
