ECO 101 Chapter Notes - Chapter 16: Tax Efficiency, Externality, Resource Depletion
Document Summary
Review- externalities: a critical shortcoming of the market mechanism. The role of individuals and governments in environmental damage: although business firms do their share in harming the environment, private individuals and government are also major contributors. Pollution and the law of conservation of matter and energy. If it is not recycled, any input used in production must ultimately become a waste product. It may end up in some municipal dump; it may literally go up in smoke, contributing to atmospheric pollution; or it may be transformed into heat, warming up adjacent waterways and killing aquatic life. But the laws of physics tell us nothing can be done to make used inputs disappear altogether: environmental damage cannot be reduced to zero. They show why the market mechanism, which is so efficient in supply consumer"s goods, has a much poorer record in terms of environmental effects. There are three ways to control activities that damage the environment: voluntarism.
