Economics 2 Professor Christina Romer Spring 2017 Professor David Romer LECTURE 10 EXTERNALITIES February 16, 2017 I. OVERVIEW A. Market failures B. Definition of an externality II. NEGATIVE EXTERNALITIES (EXAMPLE: GASOLINE) A. Definition B. New names for old concepts C. Social marginal cost D. The private outcome versus the socially optimal outcome E. Welfare analysis of a negative externality F. Other examples of negative externalities III. POSITIVE EXTERNALITIES (EXAMPLE: VACCINES) A. Definition B. Social marginal benefit C. The private outcome versus the socially optimal outcome D. Welfare analysis of a positive externality E. Other examples of positive externalities IV. REMEDIES FOR EXTERNALITIES A. Private solutions B. Government regulation C. Taxes and subsidies
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Economics 2 Professor Christina Romer Spring 2017 Professor David Romer
LECTURE 10
EXTERNALITIES
February 16, 2017
I. OVERVIEW
A. Market failures
B. Definition of an externality
II. NEGATIVE EXTERNALITIES (EXAMPLE: GASOLINE)
A. Definition
B. New names for old concepts
C. Social marginal cost
D. The private outcome versus the socially optimal outcome
E. Welfare analysis of a negative externality
F. Other examples of negative externalities
III. POSITIVE EXTERNALITIES (EXAMPLE: VACCINES)
A. Definition
B. Social marginal benefit
C. The private outcome versus the socially optimal outcome
D. Welfare analysis of a positive externality
E. Other examples of positive externalities
IV. REMEDIES FOR EXTERNALITIES
A. Private solutions
B. Government regulation
C. Taxes and subsidies
LECTURE 10 Externalities
February 16, 2017
Economics 2 Christina Romer Spring 2017 David Romer
Announcements
• Midterm 1 Logistics:
• If your GSI is Maxime Sauzet (Sections 105 & 106) go to 101 Barker
• If your GSI is Pablo Muñoz (Sections 109 & 110) or Todd Messer (Sections 102 & 114) go to 1 LeConte.
• Everyone else come to usual room (155 Dwinelle).
Announcements • DSP Students:
• You should have received an email from the course assistant (Gillian Brunet) about arrangements. If you haven’t, please contact her ([email protected]).