2.Economists see pollution problems as examples of the class of adverse externality phenomenon. An adverse externality is said to occur when the decisions of one agent harm another in an unintended way, and when no compensation occurs.Does this mean that if a pollution source, such as a power station, compensates those affected by its emissions, then there is no pollution problem?
3.consider a good whose production generates pollution damage. In what way will the effects of a tax on the output of the good differ from that of a tax on the pollutant emissions themselves?.Which of the two is likely to be economically efficient?(Huint:think about substitution effects on the demand and on the supply side.)
4.Explain the link between public goods and positive externalities?
2.Economists see pollution problems as examples of the class of adverse externality phenomenon. An adverse externality is said to occur when the decisions of one agent harm another in an unintended way, and when no compensation occurs.Does this mean that if a pollution source, such as a power station, compensates those affected by its emissions, then there is no pollution problem?
3.consider a good whose production generates pollution damage. In what way will the effects of a tax on the output of the good differ from that of a tax on the pollutant emissions themselves?.Which of the two is likely to be economically efficient?(Huint:think about substitution effects on the demand and on the supply side.)
4.Explain the link between public goods and positive externalities?
