EC238 Chapter Notes - Chapter 10: Scale-Invariant Feature Transform, Legal Doctrine, Externality
Document Summary
These techniques allow small groups negotiate to come up with ways to deal with externalities with no involvement with government. Firms are liable or legally responsible for the result of their behaviour. Liability laws can lead to socially efficient levels of emissions because it is an incentive: minimize total costs including abatement and compensation. Strict liability people are liable no matter the circumstance. Legal values do no represent willingness to pay. Transaction costs inhibit negotiation and legal action. If property rights clear social efficient outcome. Net social gains depends on which party has property rights. Must be incentive for both parties come together and meet agreement. Moral appeal program make people refrain from doing things that degrade environment. Behaviour based on morality change under circumstances. Example giving emissions reports to the public applies pressures to make people maintain good image so they reduce. Some people willing to pay for more for goods that are less damaging.
