APEC100 Lecture Notes - Lecture 7: Rent-Seeking, Renewable Energy, Coase Theorem
28 Sep 2016
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Document Summary
The planning, policy and administration process--example: spotted owls in the pacific. Seemingly impossible to have abundance of both spotted owls and timber extraction. Because: logs vs. owls, habitat vs. jobs. Energy independence vs. high polluting canadian tar sands. Domestic natural gas production and protecting drinking water. Abundant and inexpensive food vs. uncertain safety risks. Renewable energy or death of birds, bats. Special interest uses their private resources in lobbying and other activities aimed at getting government to pass laws that economically benefit the group and reduce social welfare. Taxpayer ignorance - not enough incentive to care. Empire buildings - agencies increase power for own sake. Benefit-cost analysis is an economic tool for comparing in monetary terms and desirable and undesirable impacts of proposed policies. Benefits are measured by willingness to pay. Benefit-cost ratios over 1. 0 indicate good projects, but maximum net present values are the best. Use of dollars as a measure, distributional issues.
