Why are externalities important to this analysis? What are the different types of environmental regulation? What are the good and bad points of each type of regulation?
2007-01-12 02:36:56 · 1 answers · asked by Justina 3 in Social Science ➔ Economics
I am assuming you know what a positive and negative externality is. Ok, so a neg. externality happens when someone buys a bottle of water and then throughs that empty bottle on to the highway when they are finished. Economical the person has recieved what he wanted, the water, and company has recieved the money. However, there is a cost that is not being measured that is real and that is the polution created by the purchaser. The cost is the price it would cost to pay someone to pick it up. To, fix this the government can either tax the people and or the company for the money to pick up the garbage. Now, bad regulation are regulations that limit the quantity. The reason why is that it creates addition Dead weight loss than just a tax. Since tarriff work just like quotas only with prices, they are bad for the same reason. So the best policies in regards to pollution and who pays for it is always taxation.
2007-01-12 06:19:20 · answer #1 · answered by Mr. DC Economist 5 · 1⤊ 0⤋