EC238 Chapter Notes - Chapter 1: Greenhouse Gas, Precautionary Principle, Income Tax
Document Summary
Want economic efficiency with our resources since scarcity exists. Allocation efficient when resources are at total surplus. Equity = fairness in allocation of resources. Horizontal equity: people in similar circumstances treated equally: people in a particular program have the same treatment. Vertical equity: people in different circumstances abide to different policies: income tax higher income higher tax. Inter-generational equity: future generations same opportunities as current: if we use up all the oil now we won"t have oil for future. People use unethical/immoral behaviour that effects environment. People pollute cheapest way to solve certain practical problem: disposing of waste products. Use economic incentives conduct production and consumption. Incentives repel/attract certain behaviour: punishment = repel, reward = attract. Decrease people from being profit motivated profit motivation finding cheap alternatives . Damage caused by pollution = negative externality. Companies don"t take pollution as an external cost people produce more damaging more. Air and water have poor property rights: property rights: law of ownership.
