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Public Solutions to Externalities definitions

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Termini in questo insieme (15)

  • Externality
    A cost or benefit impacting individuals not directly involved in a market transaction, such as pollution or education.
  • Internalization
    The process of incorporating external costs or benefits into market decisions, ensuring all effects are accounted for.
  • Command and Control Policy
    A government approach that mandates or prohibits specific behaviors through laws or regulations.
  • Market-Based Policy
    A government strategy using incentives like taxes, subsidies, or permits to influence market outcomes.
  • Corrective Tax
    A charge imposed to align private costs with societal costs, reducing overproduction of goods with negative effects.
  • Subsidy
    A financial incentive provided to increase production of goods with positive effects, raising their efficient quantity.
  • Pigovian Tax
    A specific tax equal to the external cost, designed to achieve the socially optimal level of production.
  • Negative Externality
    A harmful effect on third parties, such as pollution, not reflected in market prices.
  • Positive Externality
    A beneficial effect on third parties, such as education, not captured by market prices.
  • Marginal Social Cost
    The total cost to society from producing one more unit, including both private and external costs.
  • Marginal Social Benefit
    The total benefit to society from consuming one more unit, including both private and external benefits.
  • Quantity Limit
    A restriction set by authorities on the maximum amount of a good or activity, such as pollution.
  • Pollution Permit
    A tradable allowance granting the right to emit a specific amount of pollution, creating a market for pollution rights.
  • Equilibrium Quantity
    The level of output where all costs and benefits, including externalities, are considered, achieving efficiency.
  • Tax Revenue
    Funds collected from imposed taxes, which can be used for public purposes like environmental protection.