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Who was the first economist who first proposed that governments use taxes and subsidies to correct for externalities?
A. C. Pigou
Give an example of the governments goals in regards to externalities?
If a company's pollution creates economic costs (for example, the medical bill of a patient who gets sick from pollution), then the government will force the company to pay that cost.
What do all governments provide their citizens with?
The governments should provide their citizens with all their human and universal rights as described by the constitution. All governments for instance are supposed to guarantee the safety of their citizens.
What type of government did James monroe believe the US should have?
He believes that state should have central governments.
what was an “unalienable right” that all governments should protect?
The right to personal liberty
Discuss the use of indirect taxes and subsidies by governments to deal with externalities?
discuss the use of indirect taxes and subsidies by governments to deal witn externalities
What is governments role in controlling externalizes in the American economy?
Government tries to encourage positive externalities and limit negative externalities..
What are some negative or positive externalities the automotive industry produces?
Negative externalities lead markets to produce a larger quantiy than is socially desirable. Positive externatlities lead markets to porduce a smaller quantity than is social desirable. To remedy the problem, the government can internalize the externality by taxing goods that have negative externalities and susidizing good that have positive externalities.
Why do Economists care about externalities?
Economists care about externalities because they represent costs or benefits incurred by third parties not directly involved in a transaction, leading to market failures. Externalities can distort resource allocation, resulting in overproduction or underproduction of goods and services. Understanding externalities helps economists design policies to internalize these effects, promoting efficiency and equity in the market. Addressing externalities is crucial for achieving optimal social welfare.
How do governments correct for the unfairness of negative externalities?
They regulate firms and make such practices illegal.
What are solutions to externalities?
Some solutions to externalities include implementing Pigovian taxes or subsidies to internalize the external cost or benefit, setting government regulations and standards, creating property rights, using market-based instruments like cap and trade systems, and fostering community agreements or cooperation.
Who was the first economist who first proposed that governments use taxes and subsidies to correct for externalities?
A. C. Pigou
What is negative externalities?
From Wikipedia article titled "Externality":There are a number of potential means of improving overall social utility when externalities are involved. The market-driven approach to correcting externalities is to "internalize" third party costs and benefits, for example, by requiring a polluter to repair any damage caused. But, in many cases internalizing costs or benefits is not feasible, especially if the true monetary values cannot be determined.
Does International trade of goods internalizes costs?
International trade of goods can help internalize costs by promoting competition and encouraging countries to account for externalities, such as environmental impacts, in their production processes. When countries engage in trade, they may adopt standards and regulations that reflect the true cost of production, including social and environmental considerations. However, the effectiveness of this internalization depends on the presence of appropriate policies and agreements that address these externalities. Without such frameworks, trade can sometimes exacerbate cost externalization rather than internalize it.
What are advantages of corrective taxes?
Corrective taxes, also known as Pigovian taxes, aim to internalize externalities by incorporating the social costs of negative externalities, such as pollution, into the market price. This encourages producers and consumers to reduce harmful behaviors, leading to a more efficient allocation of resources. Additionally, the revenue generated from these taxes can be used to fund public goods or mitigate the impact of the externalities, further enhancing societal welfare. Ultimately, corrective taxes promote environmental sustainability and can foster innovation in cleaner technologies.
How do governments correct for negative externalize?
Governments have the ability to compensate and decrease externalities such as marginal social and environmental costs by regulatory, taxation, and punitive fine regimes. Thus, governments can use revenue and legal mechanisms to increase the cost of such externality causes and by doing do decrease their incidence.
What is government role in controlling externalities in the American economy?
Government tries to encourage positive externalities and limit negative externalities..
