ENCS473 Lecture Notes - Lecture 3: Marginal Cost, Encs, Private Good
30 Jan 2017
School
Department
Course
Professor
Document Summary
Environmental problems: problem recognition: environmental externalities associated with economic activity, production or consumption of goods. Externalities: unaccounted negative impacts on others by one"s behaviour. Ex: traffic accidents almost always cause traffic jams as people slow down to observe without accounting for the congestion cost of their action to those behind. Ex: steel mill upstream of a resort hotel. 2 different owners for both mill and resort. River is a place to dump waste for steel mill and the river is used as an attraction for tourists of hotel. Waste dumping is an environmental externality. takes account of cost of dumping to resort hotel. Marginal cost of production just considers direct costs. While social marginal cost: under-supply of public goods due to the challenges of non-rivalry and non- excludability. Public goods: non-rival and non-excludable: likely optimal use of private goods, overuse of resources governed by open access, Common property: held by groups who have specific identity, ex a.
