Log out Go to App
Go to App

Learning Materials

Features

Discover

Chapter 12: Q.22 (page 297)

What are better-defined property rights and what incentive do they provide to account for external costs?

Short Answer

Expert verified

Property rights are legal ownership rights that others do not appear to be able to infringe on without paying a charge.
It incentivises acorporation to decrease pollution costs by compensating another company or aprivate whose property has been polluted.

Step by step solution

01

Introduction

Property rights are a kind of legal ownership right that prohibits others from infringing on the owner's property without paying recompense.

02

Explanation

Property rights aid in achieving a healthy balance of economic activity and pollution. Property rights would be unable to deal with the rights of what's seen as a right of ownership thatmay be infringed until compensation is paid. Farmers that burn their fields have property rights totryanddo so, but theinducement to churn it insteadof burn it's considered an external cost.

Unlock Step-by-Step Solutions & Ace Your Exams!

  • Full Textbook Solutions

    Get detailed explanations and key concepts

  • Unlimited Al creation

    Al flashcards, explanations, exams and more...

  • Ads-free access

    To over 500 millions flashcards

  • Money-back guarantee

    We refund you if you fail your exam.

Start your free trial

Over 30 million students worldwide already upgrade their learning with Vaia!

One App. One Place for Learning.

All the tools & learning materials you need for study success - in one app.

Get started for free

Most popular questions from this chapter

Would environmentalists favor command-and-control policies as a way to reduce pollution? Why or why not?

Four firms called Elm, Maple, Oak, and Cherry, produce wooden chairs. However, they also produce a great deal of garbage (a mixture of glue, varnish, sandpaper, and wood scraps). The first row of Table 12.6shows the total amount of garbage (in tons) that each firm currently produces. The other rows of the table show the cost of reducing garbage produced by the first five tons, the second five tons, and so on. First, calculate the cost of requiring each firm to reduce the weight of its garbage by one-fourth. Now, imagine that the government issues marketable permits for the current level of garbage, but the permits will shrink the weight of allowable garbage for each firm by one-fourth.

What will be the result of this alternative approach to reducing pollution?


Elm
Maple
Oak
Cherry
Current production of garbage (in tons)
20406080
Cost of reducing garbage by first five tons
\(5,500
\)6,300
\(7,200
\)3,000
Cost of reducing garbage by second five tons
\(6,000
\)7,200
\(7,500
\)4,000
Cost of reducing garbage by third five tons
\(6,500
\)8,100
\(7,800
\)5,000
Cost of reducing garbage by third five tons
\(7,000
\)9,000
\(8,100
\)6,000
Cost of reducing garbage by fifth five tons
\(0
\)9,900
\(8,400
\)7,000

What is an externality?

Will a system of marketable permits work with thousands of firms? Why or why not?

Consider two approaches to reducing emissions of CO2 into the environment from manufacturing industries in the United States. In the first approach, the U.S. government makes it a policy to use only predetermined technologies. In the second approach, the U.S. government determines which technologies are cleaner and subsidizes their use. Of the two approaches, which is the command-and-control policy?
See all solutions

What do you think about this solution?

We value your feedback to improve our textbook solutions.

Study anywhere. Anytime. Across all devices.

Sign-up for free