ECON101 Lecture Notes - Lecture 9: Coase Theorem, Unintended Consequences, Cost
11 Dec 2017
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Is there a way to know what is the optimal level of pollution for a society: unintended consequences, no-one sets out to create pollution-pollution is an unintended byproduct of various activities. Pollution wouldn"t be a problem if it only affected the person who created it; people would create pollution only until mc(last unit of pollution) = Mb (last unit of pollution: pollution is an example of an externality, an externality is a benefit or a cost that affects someone who is not directly involved in a market transaction (production or consumption). In your rental agreement, are there any passages that relate to the coase. Quasi-public (club) goods (cable tv, toll roads: demand for a public good. In the case of public goods everyone consumes the same quantity or quality: will society provide the optimal level, probably not (free-rider problem, suppose it cost 5 nuggets to clear one acre.
