BCOR 1015 Chapter Notes - Chapter 1 Liberty : Collective Action, Public Good, Invisible Hand
27 Nov 2016
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Intro= consumption, investments, and production of individuals and corporations often have indirect effects on people aka externalities. They can be good or bad big or small but the big ones are usually problematic. Negative and positive externalities= pollution is an obvious example of a negative externality. Polluters only think about their direct profit and not about the negative consequences. Some of these consequences include decreased quality of life, and higher health care costs. However, research and development are considered to have positive externalities because they provide more information about stuff. The private gains are less than the social gains. In order to fully improve society, social gains should always be more than private gains. Taxation and externalities= economists are split; some believe that government should correct negative externalities with taxes. Others believe market mechanisms can correct these negative externalities. People can solve these problems via mutually beneficial transactions (landlord and polluter example).
