ECN 203 Lecture Notes - Lecture 11: Equilibrium Point, Carbon Emission Trading, Demand Curve
Document Summary
Individuals value the good more, but not enough good is being produced. Equilibrium point = where msc = mb. Want to increase consumption of the good. Government actions in the face of external benefits. Public provision: the production of a good or service by public authority that receives the bulk of its revenue from the government. Subsidy: payment that the government makes to private producers to cover part of the costs of production. Ex: college: students tuition would go down by amount of subsidy. Supply shift would shift to the right by the amount of the subsidy. Most effective way to raise revenue is to tax goods with negative externalities. Will encourage firms to develop more products with positive externalities. Voucher: a token that the government provides to households that can be used to buy specified goods or services. Contracts between market participants and affected bystanders.
