andPublicGoods(微观经济学-华侨大学,JeffCaldwe

Chapter18ExternalitiesandPublicGoodsChapter18Slide2TopicstobeDiscussedExternalitiesWaysofCorrectingMarketFailureExternalitiesandPropertyRightsCommonPropertyResourcesChapter18Slide3TopicstobeDiscussedPublicGoodsPrivatePreferencesforPublicGoodsChapter18Slide4ExternalitiesNegativeActionbyonepartyimposesacostonanotherpartyPositiveActionbyonepartybenefitsanotherpartyChapter18Slide5ExternalCostScenarioSteelplantdumpingwasteinariverTheentiresteelmarketeffluentcanbereducedbyloweringoutput(fixedproportionsproductionfunction)Chapter18Slide6ExternalCostScenarioMarginalExternalCost(MEC)isthecostimposedonfishermendownstreamforeachlevelofproduction.MarginalSocialCost(MSC)isMCplusMEC.MCS=MCIDP1AggregatesocialcostofnegativeexternalityP1q1Q1MSCMSCIWhentherearenegativeexternalities,themarginalsocialcostMSCishigherthanthemarginalcost.ExternalCostsFirmoutputPriceIndustryoutputPriceMECMECIThedifferencesisthemarginalexternalcostMEC.q*P*Q*TheindustrycompetitiveoutputisQ1whiletheefficientlevelisQ*.Theprofitmaximizingfirmproducesatq1whiletheefficientoutputlevelisq*.Chapter18Slide8ExternalCostNegativeExternalitiesencourageinefficientfirmstoremainintheindustryandcreateexcessiveproductioninthelongrun.Chapter18Slide9ExternalitiesPositiveExternalitiesandInefficiencyExternalitiescanalsoresultintoolittleproduction,ascanbeshowninanexampleofhomerepairandlandscaping.Chapter18Slide10MCP1ExternalBenefitsRepairLevelValueDIsresearchanddevelopmentdiscouragedbypositiveexternalities?q1MSBMEBWhentherearepositiveexternalities(thebenefitsofrepairstoneighbors),marginalsocialbenefitsMSBarehigherthanmarginalbenefitsD.q*P*Aself-interestedhomeownerinvestsq1inrepairs.Theefficientlevelofrepairsq*ishigher.ThehigherpriceP1discouragesrepair.Chapter18Slide11WaysofCorrectingMarketFailureAssumption:ThemarketfailureispollutionFixed-proportionproductiontechnologyMustreduceoutputtoreduceemissionsUseanoutputtaxtoreduceoutputInputsubstitutionpossiblebyalteringtechnologyChapter18Slide12TheEfficientLevelofEmissionsLevelofEmissions246DollarsperunitofEmissions02468101214161820222426MSCMCAE*Theefficientlevelofemissionsis12(E*)whereMCA=MSC.Assume:1)Competitivemarket2)Outputandemissionsdecisionsareindependent3)ProfitmaximizingoutputchosenAtEothemarginalcostofabatingemissionsisgreaterthanthemarginalsocialcost.E0AtE1themarginalsocialcostisgreaterthanthemarginalbenefit.E1Whyisthismoreefficientthanzeroemissions?Chapter18Slide13WaysofCorrectingMarketFailureOptionsforReducingEmissionstoE*EmissionStandardSetalegallimitonemissionsatE*(12)EnforcedbymonetaryandcriminalpenaltiesIncreasesthecostofproductionandthethresholdpricetoentertheindustryChapter18Slide14StandardsandFeesLevelofEmissionsDollarsperunitofEmissionsMSCMCA312E*StandardFeeChapter18Slide15OptionsforReducingEmissionstoE*EmissionsFeeChargeleviedoneachunitofemissionWaysofCorrectingMarketFailureChapter18Slide16TotalAbatementCostCostislessthanthefeeifemissionswerenotreduced.TotalFeeofAbatementStandardsandFeesLevelofEmissionsDollarsperunitofEmissionsMSCMCA312E*FeeChapter18Slide17StandardsVersusFeesAssumptionsPolicymakershaveasymmetricinformationAdministrativecostsrequirethesamefeeorstandardforallfirmsWaysofCorrectingMarketFailureChapter18Slide18Firm2’sReducedAbatementCostsFirm1’sIncreasedAbatementCostsMCA1MCA2TheCaseforFeesLevelofEmissions246FeeperUnitofEmissions01234567891011121313514Thecostminimizingsolutionwouldbeanabatementof6forfirm1and8forfirm2andMCA1=MCA2=$3.3.752.50Theimpactofastandardofabatementof7forbothfirmsisillustrated.NotefficientbecauseMCA2MCA1.Ifafeeof$3wasimposedFirm1emissionswouldfallby6to8.Firm2emissionswouldfallby8to6.MCA1=MCA2:efficientsolution.Chapter18Slide19AdvantagesofFeesWhenequalstandardsmustbeused,feesachievethesameemissionabatementatlowercost.Feescreateanincentivetoinstallequipmentthatwouldreduceemissionsfurther.WaysofCorrectingMarketFailureChapter18Slide20ABCistheincreaseinsocialcostlessthedecreaseinabatementcost.MarginalSocialCostMarginalCostofAbatementTheCaseforStandardsLevelofEmissionsFeeperUnitofEmissions0246810121416246810121416EBasedonincompleteinformationstandardis9(12.5%decrease).ADEABCDABCBasedonincompleteinformationfeeis$7(12.5%reduction).Emissionincreasesto11.Chapter18Slide21Summary:Feesvs.StandardsStandardsarepreferredwhenMSCissteepandMCAisflat.Standards(incompleteinformation)yieldmorecertaintyonemissionlevelsandlesscertaintyonthecostofabatement.WaysofCorrectingMarketFailureChapter18Slide22Summary:Feesvs.StandardsFeeshavecertaintyoncostanduncertaintyonemissions.Preferredpolicydependsonthenatureofuncertaintyandtheslopesofthecostcurves.WaysofCorrectingMarketFailureChapter18Slide23TransferableEmissionsPermitsPermitshelpdevelopacompetitivemarketforexternalities.AgencydeterminesthelevelofemissionsandnumberofpermitsPermitsaremarketableHighcostfirmwillpurchasepermitsfromlowcostfirmsWaysofCorrectingMarketFailureChapter18Slide24QuestionWhatfactorscouldlimittheefficiencyofthisapproach?WaysofCorrectingMarketFailureChapter18Slide25TheCostsandBenef