ECON 3500 Chapter Notes - Chapter 9: Environmental Policy, Complementary Good, Externality

• School: University of Guelph
• Department: Economics
• Course: ECON 3500
• Professor: Paul Anglin

Document Summary

Cities regulate land use, using land-use zoning plans to segregate different types of land use commercial, industrial and residential into separate zones. Residential zones are divided into separate zones for low-density and high density housing. To sepa(cid:396)ate la(cid:374)d uses that a(cid:396)e (cid:862)i(cid:374)(cid:272)o(cid:373)pati(cid:271)le(cid:863) i(cid:374) so(cid:373)e se(cid:374)se. Zoning can be used to separate pollution sources from residential areas (cid:858)e(cid:454)te(cid:396)(cid:374)alities (cid:272)ause i(cid:374)effi(cid:272)ie(cid:374)(cid:272)(cid:455)(cid:859) industrial firms generate lots of externalities (noise, glare, dust) Zoning is appealing as an environmental policy because it is simple: the easiest way to reduce the exposure to pollution is to put a buffer between a polluter and its potential victims. P(cid:396)o(cid:271)le(cid:373): does(cid:374)(cid:859)t (cid:396)edu(cid:272)e pollutio(cid:374) to its so(cid:272)iall(cid:455) effi(cid:272)ie(cid:374)t le(cid:448)el (cid:271)ut si(cid:373)pl(cid:455) (cid:373)o(cid:448)es it a(cid:396)ou(cid:374)d. The economic approach to reduce pollution (tax on pollution) does reduce to its socially efficient level. Motivation for zoning is to ensure that households or firms generate a fiscal surplus, not a deficit.