Externalities

Description

A-Level Economics (Microeconomics) Flashcards on Externalities, created by Mary Doria on 05/11/2016.
Mary Doria
Flashcards by Mary Doria, updated more than 1 year ago
Mary Doria
Created by Mary Doria about 8 years ago
104
1

Resource summary

Question Answer
The importance of Property Rights Way for polluters to pay - failure to protect property rights may lead to the tragedy of the commons
Negative Externalities This occur when production and/or consumption impose external costs on third parties outside of the market for which no appropriate compensation is made -This leads to over production and market failure
Diagram of Negative Externalities
Reducing Externalities : Use of Pollution Taxes This increase the private costs, which causes a fall in demand. This also increases government tax revenue, which can be invested into a cleaner and greener environment
Reducing Externalities : Carbon Trading in the EU Cap and Trade scheme and this allocates or auctions emissions allowances
Advantages of UK Carbon Price Floor -Makes low carbon electricity more competitive -Help to reduce carbon price volatility
Disadvantages of Carbon price floor -Better Alternatives -Restrict supply of carbon permits to increase market price
Evaluation: Problems with environmental taxes -Assigning the right level of tax -Consumer welfare effects -Employment and investment consequences
Positive externalities This occurs when production and/or consumption create external benefits on third parties outside the market This could lead to market failure due to it being under-provided.
Diagram for positive externalities
Show full summary Hide full summary

Similar

Dictionary Macrostructure
Ash A
Economics - unit 1
Amardeep Kumar
Using GoConqr to study Economics
Sarah Egan
Economics
Emily Fenton
AN ECONOMIC OVERVIEW OF IRELAND AND THE WORLD 2015/16
John O'Driscoll
Using GoConqr to teach Economics
Sarah Egan
General Notes for Imperfect Competition
Ashley Hay
Functions of Money
hannahcollins030
Comparative advantage
jamesofili
GCSE - Introduction to Economics
James Dodd
Market & Technology Dynamics
Tris Stindt